How to Trade USD/JPY through the Trade Wars
All that has changed. Week after week, Trump’s trade talk has seemed to harden. Consider the developments from just the past few days: The White House forged ahead with tariffs on $50 billion of goods from China. Talks to renegotiate NAFTA stalled and Trump imposed tariffs on close allies Canada, Mexico and the European Union.
HOW DID THE TRADE WAR COME INTO THE FOREFRONT?
In 2016 one of Donald Trump’s main theme’s to his campaigns was why American jobs were being lost due to unfair global trade. Trump has mentioned on several occasions about imposing tariff’s on Chinese goods and to pull the US out of several trade deals.
Compared to the other US Presidents Trump definitely kept his campaign pledges from pulling out of TPP ie the Tran-Pacific Partnership to investigation into China’s alleged theft of American Intellectual property right and last but not least imposing tariffs on steel and aluminium. It but obvious there would be a retaliation right?
The US, Canada and Mexico
The US are the first to make a move in the trade wars, the US dollar has seen recent weakness due to the tariffs it has applied to steel and aluminium imports from the EU, Canada, and Mexico. The US dollar before the sanctions applied was doing very well due to the political fears in Italy and Euro inflation figures, both of which causing the Euro to plummet to levels below 1.1700.
We had the most recent NFP results for the US and the figures were excellent with the figure being 223k compared to the 189k expected. This just helps the US dollar regain its strength, the turning points in this trade war will be when opposing nations start sanction on US imports to their nations such as China has done already. This helped to keep the trade war on hold between the US and China as the US feared they would decrease trade balance it continued.
Here at Platinum, we are going to focus in on the trade war and look to capitalise on the rise and fall of the US dollar due to this. The market has become extremely liquid due to the trade wars and political reforms that we must take advantage now whilst the market is giving the opportunities.
HOW TO TRADE USD/JPY THROUGH THE TRADE WARS
Technical Point of View on the USD/JPY
From the daily chart, we can see the head and shoulders pattern that previously formed. This pattern has formed due to the recent volatility on the pair due to trade wars and US dollar reaction to sanctions being imposed on the EU, Canada, and Mexico. We are now looking for a continued move from the neckline support. The bottom for our prediction should be the 1.1850 level, it is showing major demand with great probability of moving higher from there.
USD/JPY FOREX TRADING STRATEGY
Trade Entry: Long USD/JPY @ 108.50 with a 40 pip stop loss with a target of 110.80
Key Technical Levels on the USD/JPY
- 108.00 – Long term Buying Level
- 107.50 – Long term Buying Level
- 110.80 – Short term Selling Level
- 111.30 – Long term Selling Level
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