USD rises along with geopolitical tensions between US and China
The US dollar strengthened as investors reacted to the rising tensions between the US and China. Earlier today, China announced a series of sanctions against eleven senior American officials, including Senators Marco Rubio and Ted Cruz. The sanctions were in reaction to the eleven sanctions the US announced against Chinese officials last week. Also, earlier today, China moved military vehicles to Taiwan, where the US health secretary was meeting with officials. Hong Kong security officials also arrested Jimmy Lai, a leading pro-democracy figure in the city. All these issues mean that tensions between the two super powers will continue to rise.
The price of crude oil rose today as investors reacted to the struggles facing American oil companies. According to Baker Hughes, the number of active rigs in the US declined to a new low of 176. In contrast, the country had more than 600 rigs in January this year. The price also rose after some strong inflation data from China. Data from the statistics office showed that the headline CPI increased by 2.7% in July, which was better than the previous 2.5%. Analysts were expecting the CPI to come in at 2.6%. The headline PPI declined by 2.7% after falling by 3% in the previous month.
Futures tied to the Dow Jones and S&P 500 are in the green today as traders wait for more progress on stimulus. On Saturday, Donald Trump signed executive orders to deliver relief aid to Americans affected by the pandemic. The new order, which some have called unconstitutional, will provide $400 to unemployed Americans. The order will also defer payroll taxes and provide students with three months of not paying student debt. Still, with Democrats and Republicans being deadlocked, it is possible that the new order will be challenged in court.
The EUR/USD pair dropped to an intraday low of 1.1752, which is lower than last month’s high of 1.1905. On the four-hour chart, the price has moved below the 50-day EMA. It remains above the 100-day EMA while the RSI has dropped to its lowest level since June this year. The pair also seems to be forming a head and shoulders pattern. Therefore, the price is likely to continue falling as bears target moves below 1.1700.
The XBR/USD pair is trading at 44.87, which is within the range it has been this month. On the four-hour chart, the price is along the 50-day and 100-day exponential moving averages, Also, the price is along the 50% Fibonacci retracement level while the Average True Range (ATR) has been falling. The price has also formed a rising wedge pattern, which means that it may break out lower.
The AUD/USD pair dropped to an intraday low of 0.7147. On the daily chart, the price is in an upward trend, as evidenced by the ascending trend line that is shown in white. The RSI and the DeMarker indicators have moved from the overbought levels while the price remains above the 50-day and 100-day exponential moving averages. The pair is likely to continue rising as bulls aim for the next resistance level at 0.7242.