Trade wars have taken off seriously, while the financial markets continue their positive rebound. The last word has not yet been spoken, so the durability of improving moods is not certain.
On Friday, the US began to respect import duties on goods from China. In response, China applied similar measures for US goods. The trade conflict between the two countries has passed from the announcement phase to actual actions and it is very likely that the last word has not yet been spoken. After all, President Trump himself threatened that if China responded to its customs (which Beijing did), then it would tighten the tariffs even on all imports from China. Hence, the escalation of market concerns is not entirely ruled out, although so far investors remain relaxed. Perhaps it is a symptom of tiredness and without the tangible evidence of the risk of major disturbances in global trade, markets are not going to react? However, this would be something new after a rather low violate trading conditions of June. Or maybe the record heat wave that hit Britain last week dulled traders in the City of London? Whatever it is, I do not think the threat is gone.
So far, however, the recovery of risky assets continues, which is primarily used in currencies from Antipodes and Scandinavia, and the loser is USD (which until recently was a safe haven). Friday's US labor market report with wage dynamics was lower than forecast, so it did not contribute to defending the dollar.
Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market has made a Double Top technical pattern at the level of 95.53 and now the trend has changed to the downtrend. The question remains, whether this change is temporary or permanent in nature. Nevertheless, the price has broken below both 61% Fibo at 94.08 and the short-term trendline support around the level of 94.00. The weak and negative momentum indicate a possible slide towards the next important technical support at the level of 93.21.
