The USD Index closed June on a down note, firmly in bearish territory. A dovish FED and a collection of weak economic indicators fostered a bearish attitude toward the Greenback. Are the tables going to turn in July? Well, the answer to that question depends greatly on the U.S./China tariff standoff.

Today’s news cycle has been active for a Saturday, led by a “cease-fire” in the trade war between the United States and China. Earlier,  U.S. President Trump and Chinese President Xi Jinping made the first strides in wrapping up the year-long conflict. For the time being, no new tariffs are to be put in place from either side. This is being viewed as good news, as many in the financial community saw the G-20 Summit as an ideal time for trade war tensions to mount. The situation remains fluid, so stay tuned. 

USD Index Limps Into The Second Half Of 2019

It is halftime of the 2019 trading year and the Greenback is on the ropes. Consistent devaluation was the story of June ― is there anything that can boost the USD Index by January 1, 2020?

Perhaps. Last week brought FED Chairman Jerome Powell and a collection of FOMC members publicly denouncing a ½ point July rate cut. The chances of a ¼ point July cut stand at 72% according to the CME FedWatch Index;  rates are going to come down, just not as fast as the consensus previously believed.

Overview: For September USD Index futures, tempered rate-cut expectations and the relaxation of U.S./China trade war tensions are good news. While the intermediate-term bearish trend remains valid, July is poised to bring a rebound.

If you are trading the September USD Index, keep a close eye on the Swing Low (95.365) and the 38% Current Wave Retracement (96.090). Price is highly likely to rotate between these two areas for the coming holiday week, at least until the U.S. Non-Farm Payrolls release on Friday.