US Futures Lower as Trade Wars Continue

25 / 06 / 2018
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The US500 index was seen 0.50% lower during the London session on Monday and was trading slightly above the key support of 2,740 USD as trade wars between China and US are intensifying.

Over the weekend, the Trump administration has decided to restrict China’s ability to invest in or acquire US companies in the industries identified by Beijing in its so-called Made in China 2025 plan.

China responded again and the PBOC cut the required reserve ratio (RRR) for some banks by 0.5% and this move is expected to unlock 700 billion yuan in liquidity to the markets. The yuan weakened after this move and the USDCNY pair is up 2.5% since June as China is quietly trying to devalue the yuan as a move in the ongoing trade wars.

As usual, the European session brings the US futures lower, but US investors are almost every time buying the dips so the similar behavior can occur today as well. The price is now testing the strong support of 2,740 USD and if it doesn’t hold, the next key level for bulls is at 2,703 USD, where the 100 day moving average is seen along with previous lows and highs.

On the upside, the resistance is at 2,760 USD and if the bullish wave will be intense, further rise toward 2,770 USD could happen quickly. In all cases we strongly recommend to have rigorous money and risk management.

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