Trade war pressures financial markets. Main Trading Ideas – 5.08.2019

The last round of negotiations between the US and China ended even worse than expected. Donald Trump announced the introduction of a 10% tariff on Chinese goods worth $ 300 billion from September 1. At the same time, Trump declared that he would tighten the tariffs even more if the negotiations reach an impasse. Trump is dissatisfied that China does not follow its obligations and has not increased imports of agricultural products from the United States, hasn’t “stopped selling fentanyl to the United States.” Nevertheless, the president is ready to continue negotiations. “….We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!” – Trump tweeted. China threatens to respond aggressively to protect its interests.

For the first time in 10 years, the US Federal Reserve has lowered its key interest rate by 25 basis points to 2.25%. Powell added that, according to the Fed, lowering the rate by 25 basis points is enough to support the American economy.
The president considers the actions of the Fed chief insufficient
“….As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place – no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!”

Gold updated 2013 highs. From the summer consolidation in the range of $1380 – $1420, the asset climbed higher and continues to grow. We recommend holding a long position until gold is above the 38.2% Fibo at $1380. The profit target is $1480. If growth continues, then the next target will be found at $1580.

The EURUSD almost reached the 1.10 mark, but the latest news let the currency pair down. The Cayman indicator stepped out of the overbought zone, which can indicate a trend reversal. We can see increased bullish activity on the H4 chart. It gives us all reasons to expect growth at least to the upper border of the channel. Then if it is broken and EURUSD will rise above the EMA50 and ЕМА200 – we are waiting for the price to recover to 1.13 level.

To sum up, here are our targets for:
Gold – buy up to 1480
EURUSD – buy up to 1.13.