06.07.201810:14 Forex Analysis & Reviews: Global macro overview for 06/07/2018

US customs duty on Chinese products is in force today. Only now we will see what is the actual position and strategy of both sides of the commercial dispute and whether it will escalate to trade wars.

Among other things, it will come out if China decides on non-tariff restrictions and obstacles, for example through stronger targeting of Brazilian soybean producers or adopting a policy of preferable European suppliers (eg delivery of Airbus instead of Boeing). The ball is the Chinese side, and it depends on it whether the conflict will escalate. A definite response to US policy will provoke Trump's administration to impose further duties and create conflict. For now, the first hours after the entry into force of the duties are calm and positive moods, including Shanghai Composite comes out above the line and from the daily minimum it reflects on almost 3.0%. It's just that it does not mean anything at all. It would be unreasonable to make hasty, optimistic conclusions and exclude further turbulence.

Let's now take a look at the USD/JPY technical picture at the H4 time frame. The Chinese Foreign Minister announced that revenge duties on American products had just come into effect. USD/JPY falls after this information to the level of 110.55, but the key level for bears is still seen at the level of 110.27 (50% Fibo and technical support level). In a case of a further sell-off, the next support is seen at the level of 110.03 (61% Fibo and technical support level). The market conditions remain oversold and the momentum is neutral with a slight bias to the downside. The nearest resistance zone is seen between the levels of 110.72 - 110.78.