• US-CHINA trade talks in G20 summit still uncertain
  • US new home sales and manufacturing PMI missed expectations
  • DXY hits bounces from a strong area of supply

The Trump administration announced that it’s planning more restrictions on US tech exports to China and the trade talks that are supposedly going to happen during the next G20 summit in Japan are uncertain at the best. Today President Trump said: “If a trade deal happens with China, that would be great; if not, that’s fine”.

Extremely irresponsible words from the US President given the fact that US importers are the ones paying for the tariff increase in China’s exports.

At the same time, the Census Bureau released April’s New Home Sales numbers which missed expectations (ACTUAL: -6.9% VS 4.5% PREVIOUS; EST -2.5%) and Markit Economics released the Flash manufacturing PMI which also missed expectations (50.6 VS 52.6 PREVIOUS; EST 52.7) Everything pointed at a strong bearish pressure for the US Dollar.

Now let’s look at some technicals.

After breaking with the blue pennant around 97.00the $DXY rallied to 98.30 which was the 200% retracement of the A-to-B move. This level is important because it’s the high that was made after finally breaking with the 97.70 level. After this, the $DXY dipped again the test the 97.00 level and we calculated the 127.2% retracement of the last leg down, the C-to-D move and it confluence perfectly with that heavy zone of supply at around 98.30

Today the $DXY rallied spiked higher in the US session due to OK job data (jobless claims) but it was quickly overturned by trade uncertainty and bad economic health data. This green-to-red move that we experienced today is actually quite significative because we bounced from that heavy supply area but be broke with a very important bullish structure, the bold white triangle.

Now that we are in an immediate bear market the next level to be tested is the 97.70 and if broken the next bear target would be the 97.30 which is also the 76.4% retracement of the last move up.