The US Dollar Retraces Amid Rumours of Potential Tariff Reductions for China
FXOpen
Recent US data points to improvement in the manufacturing sector: the Purchasing Managers’ Index (PMI) reached 50.7, exceeding forecasts. However, both the composite index and the services PMI came in below expectations.
Particular attention is being drawn to discussions within the White House regarding a potential reduction in tariffs on Chinese imports — a move that could significantly impact trade relations and support a strengthening of the US dollar.
Moreover, speculation regarding the resignation of Federal Reserve Chair Jerome Powell appears to have been exaggerated, which could also be perceived as a bullish signal for the USD. Together, these factors set the stage for an upward correction in currency pairs such as USD/JPY and USD/CAD.
USD/JPY
Having narrowly missed revisiting last year’s lows near 139.60, the USD/JPY pair reversed course and at one point yesterday traded above 143.00. On the daily timeframe, a bullish “piercing pattern” is potentially forming. Technical analysis suggests there may be room for continued upward correction towards the 145.00–145.50 region. A resumption of the downward trend may only be considered upon a firm break below the 140.00 level.
Key events likely to influence USD/JPY pricing today include:
- 15:30 (GMT+2): Initial Jobless Claims (US)
- 18:00 (GMT+2): Kansas City Fed Manufacturing Index (April)
- 20:00 (GMT+2): Atlanta Fed’s GDPNow Estimate (Q1)
- 23:30 (GMT+2): Federal Reserve Balance Sheet
- 23:30 (GMT+2): Reserve Balances at Federal Reserve Banks
USD/CAD
The downward move in USD/CAD has slowed around the 1.3800 level. A bullish hammer candlestick has formed on the daily chart, though a clear upward momentum has yet to emerge. Should a correction develop, price could climb toward the 1.3950–1.4000 range. Conversely, a break below the recent low may open the path toward 1.3640–1.3600.
Key events likely to affect USD/CAD pricing in the coming days:
- Tomorrow at 15:30 (GMT+2): Core Retail Sales (February)
- Tomorrow at 15:30 (GMT+2): Manufacturing Sales (March)
- Tomorrow at 15:30 (GMT+2): Headline Retail Sales
Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips (additional fees may apply). Open your FXOpen account now or learn more about trading forex with FXOpen.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Stay ahead of the market!
Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.
Latest articles
Euro and Pound Remain Cautious Ahead of FOMC Minutes
The euro and British pound are trading cautiously against the US dollar as markets await the release of the minutes from the Federal Reserve’s latest meeting. At its July meeting, the Fed left interest rates unchanged and reiterated that
AUD/CAD: Two Hawkish Central Banks, One Triangle Left to Break
The Aussie enters this week with genuine hawkish backing. RBA Assistant Governor Christopher Kent reaffirmed that tighter policy is working as intended, with markets now pricing roughly a 70% chance of one final hike to 4.60% by early next
Apple Analysis: Price Tests the POC Area Following Trend Breakdown
Apple shares remain under close scrutiny after several notable developments. On 10 August, Jefferies downgraded the stock from Hold to Underperform and lowered its price target from $285.56 to $263.66. The investment bank suggested that Apple may have