EUR/USD Gains Undermined by EU-US Trade War Fears, Yen May Gain

Asia Pacific Market Open Talking Points

• EUR/USD declines on renewed US-EU trade war fears
• S&P 500 followed crude oil prices higher on Monday
• Equities may fall next, brushing off gains on Wall Street

Find out what the #1 mistake that traders make is and how you can fix it!

Breaking News: USTR Proposes EU Product Tariffs

EUR/USD fell in early Asia Tuesday trade after the Office of the United States Trade Representative (USTR) proposed levying tariffs on European products. This is to be a countermeasure after the WTO repeatedly found that EU subsidies to Airbus, a major commercial aircraft producer, “have caused adverse effects to the United States”. This is another warning sign that US-EU trade tensions are re-igniting.

EUR/USD Reaction to USTR EU Tariff Proposal News

Chart Created in TradingView

FX News Monday

The Euro gave up some gains from earlier in the day as the US Dollar underperformed against its major counterparts on Monday, weakening in the aftermath of a mixed local jobs report from Friday. Accompanying increased jobs gains were a disappointment in wage growth and labor force participation data. It traded broadly lower with falling front-end government bond prices, especially in the latter half of the day.

After S&P 500 futures weakened, the index made a U-turn following market open as it managed a +0.10% close. Gains in the equity tracked a surge in crude oil prices. Newswires attributed this to increased tensions in Libya which may disrupt supply chains, boosting the commodity. Earlier, there was an airstrike conducted by the Libyan National Army - one of the leading factions in the on-going civil war - near Mitiga International Airport.

Tuesday’s Asia Pacific Trading Session

Nikkei 225 futures are now pointing lower heading into Tuesday’s market open, hinting that renewed trade war fears may drag on market optimism. This comes after US-China ones end without a tangible breakthrough. If this is the case, the anti-risk Japanese Yen may gain while the sentiment-oriented Australian and New Zealand Dollars weaken.

US Trading Session Economic Events

Asia Pacific Trading Session Economic Events

** All times listed in GMT. See the full economic calendar here

FX Trading Resources

• See how equities are viewed by the trading community at the DailyFX Sentiment Page
• Join a free Q&A webinar and have your trading questions answered
• See our free guide to learn what are the long-term forces driving US Dollar prices
• See our study on the history of trade wars to learn how it might influence financial markets!

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from IG.