Sino-U.S. trade talks

EURUSD at Yearly Low

Asian indices closed higher on Tuesday on optimism that the Sino-US trade talks may be able to reach a trade deal before the deadline on March 1st. Japan’s major index Nikkei closed 2.61 percent higher at 20,864. China’s Shanghai Composite index also added 0.52 percent to 2,668, Hong Kong’s Hang Seng finished 0.11 percent higher at 28,177 while Australian stocks bounced off its early lows to snap two straight sessions of losses on Tuesday. The ASX 200 made up for a sluggish start and ended the day 18 points higher or 0.3% to 6079. A fresh wave of buying interest is now lifting greenback to fresh yearly peaks sending the USDollar (DXY) index above 97.00. The Aussie dollar is outperforming trading 0.27 percent higher against USD at 0.7082. The US 10-year bond is gaining 0.0206% to 2.676%, while crude oil is adding 0.34 percent to 52.59 after yesterdays selloff.

On the Lookout: US President Trump made some positive comments on the US-China trade issue, lifting the risk sentiment across the board. Trump noted that “We are going to make great deals on trade. We don’t want China to have a hard time”. It is worth noting that the 30-day truce period is set to end on March 1, after which the US is scheduled to hike tariffs on $200 billion worth of Chinese goods to 25% from 10%.

The Australia National Australia Bank’s Business Conditions came in at 7, above expectations in January and helped AUD while the Singapore Retail Sales (YoY) dipped from previous -3% to -6% in December

In the economic calendar, US Federal Reserve chair, Jerome Powell, delivers a speech. The JOLTS job openings survey is issued.

Trading Perspective: In forex markets, the US dollar remained on the offensive, as concerns of a slowdown in Europe has pushed up yield differentials in favor of the USD. The Kiwi also followed its neighbor and hit three-week lows at 0.6730.

EURUSD Daily Chart

EURUSD: European Central Bank and European Commission are now confirming the slowdown in the euro bloc following their recently revised projections for economic growth and inflation, acknowledging at the same time that the ongoing deceleration in fundamentals could be longer than expected. The pair was under pressure during the US and Asia session with the price hovering around the yearly lows at 1.1278.  The bears took control for the short term and an attempt to 1.1215 the low from November 12th, 2018 can’t be ruled out. On the upside, the next hurdle emerges at 1.1355 the 23.6% Fibo of the September-November drop, while more resistance can be met at the 50-day moving average around 1.1390.

In EUR futures markets, investors added around 3.6K contracts to their open interest positions on Monday from Friday’s final 536,659 contracts. In the same line, volume rose by around 53.1K contracts.

USDJPY is ready to break the key resistance at 50-day moving average at 110.55 which if make it convincingly can push the prices fast higher at 111.26 as there is no major hurdle in between. Support for the pair is at 109.7 the low from yesterday while more demand will emerge at the weekly lows at 109.43.

In JPY futures markets open interest declined for the third session in a row, this time by nearly 1.3K contracts on Monday from Friday’s final 188,278 contracts. On the other hand, volume reverted the previous drop and rose by almost 17.2K contracts.

Gold is holding the positive tone but is trapped in narrow trading range between 1304 and 1311, a wait and see stance is the best for now, traders have to jump if the precious metal breaks to the upside or downside, major resistance stands at $1315, while on the flipside the $1300 round figure will attract some buyers.

XAUUSD Daily Chart