The EUR/USD pair rallied a bit during the trading session on Tuesday, breaking above the 1.2350 level. That’s an area that has caused a bit of resistance in the past but now should offer some support. We have also bounced from a significant daily trendline recently, and that, of course, comes into play when looking at this pair. While not the most recent sensitive pair in the world, the EUR/USD pair certainly has a certain amount of that built into it. As trade seems a bit less threatened between the United States and China over the last couple of days, this pair has rallied. We have also bounced from a major uptrend line, and that should continue to keep a bit of positivity in this market. Keep in mind that if the trade situation seems to be stabilizing, that typically will have people selling the US dollar as they go around the world looking for more risk.
The British pound rallied significantly during the trading session on Tuesday, reaching towards the 1.4175 level by the time the Americans took over. The market looks likely to continue to grind higher, but that’s probably going to be the key word here: “grind.” The British pound has rallied a bit during the trading session on Tuesday, reaching towards the 1.4175 level. The market looks likely to continue to be very noisy, but keep in mind that this market is likely to continue to see a lot of choppiness and reaction to the overall risk appetite of traders. The 1.40 level underneath should be a massive “floor” in this market, and I think that if we were to break down below where it would be a very negative turn of events, but keep in mind that this is more than likely going to move with the hopes and fears when it comes to trading talks between the United States and China.
The Australian dollar exploded to the upside during the trading session on Tuesday, as we continue to see a huge “risk on” move after the Chinese appear to be willing to call him things down in the trade war talk. The Australian dollar has rallied a bit during the trading session on Tuesday, as the Chinese look ready to try to defuse the situation between China and America. I believe that at this point, this continues to be a “buy on the dips” market, sending the Australian dollar towards the 0.78 level, and then possibly beyond. I believe that the 0.77 level underneath is massive support. I like the idea of buying value when it appears, and most certainly can appear in this market when we pull back. However, one of the biggest problems out there is the potential headline risks that could come from Donald Trump or China itself. I think that the market continues to hinge on what goes on there.
The US dollar has spent most of the day bouncing around against the Japanese yen on Tuesday, hanging about the 107 level. I believe the pullbacks will more than likely offer buying opportunities, but this market is going to be watching the headlines, protectively out of the United States and China. The US dollar has been very noisy during the trading session on Tuesday, as we continue to find buyers on dips. Keep in mind that the headlines coming out of both the United States and China involving trade will continue to be a major move or of this market, as the USD/JPY pair is so highly correlated to risk appetite. I believe that the stock markets will continue to influence where this pair goes, so as the S&P 500 rallies, so will this pair. If we can break above the 107.50 level, the market is likely to test the 108-level next, and a break above there should open the door to the 110 handle.