Trump’s tariffs come into play, market stands by

• Markets brace as Trump’s tariffs against Chinese products enter their first day of implementation.
• China’s state media accused Trump’s administration to behave like a “gang of hoodlums”, commenting on the issue.
• According to media, Beijing has vowed to respond immediately with an equal amount of tariffs.
• On the other hand, Trump has warned that it may ultimately target over $500B worth of Chinese products, practically all imports.
• Should there be further headlines on the issue we could see volatility rising further.

EUR/USD tested the 1.1715 (R1) resistance line yesterday, however traded on lower levels later on.

We see the case for the pair to continue to trade in a sideways manner today however with some bearish tendencies as the US employment report may strengthen the USD side in the American session.

It should be noted that the pair may also prove sensitive to any headlines regarding trade war.

Should the bulls take over we could see the pair breaking the 1.1715 (R1) resistance level and aim for the 1.1820 (R2) resistance hurdle.

If the bears take the reins we could see the pair breaking the 1.1640 (S1) support line and aim for the 1.1550 (S2) support barrier.

PM May to enter intra Cabinet battle for Brexit

• The UK Cabinet is to retreat to the country side today in order to discuss Theresa May’s new Brexit plan.
• Seven Brexiteer ministers have already met in Boris Johnson’s office in order to coordinate ahead of today’s meeting.
• Current UK top negotiator Davis seems to have commented that the PM’s plan is unworkable.
• On the other side of the Channel the plan seems to have provoked negative reactions according to media.
• Should there be further negative headlines we could see the pound weakening and vice versa.

Cable peaked yesterday as the GBP side strengthened by BoE governor’s speech yesterday, however relented any gains made and continued testing the 1.3215 (S1) support line.

We could see the pair continue to trade in a sideways manner with some bearish tendencies as the US employment report release later today may strengthen the USD side.

Should the pair find extensive buying orders along its path we could see the pair aiming for the 1.3330 (R1) resistance line.

Should it come under selling interest we could see it breaking the 1.3215 (S1) support line and aim for the 1.3125 (S2) support zone.

In today’s other economic highlights:

In today’s European session, we get Germany’s Industrial Production growth rate for May and UK’s Halifax House Prices growth rate for June.

In the American session, we get from the US the Employment report for June with its NFP figure as well as the Trade Balance figure for May while from Canada we get the Employment data for June, the Trade Balance figure for May and the Ivey PMI for June.