Beware end of the quarter market moves
The weekend has not brought yet another important news in the field of restricting the freedom of international trade, so markets are entering a new week with a relatively calm climate. If anything, press releases from the US and China are rather mild. The US Treasury secretary Mnuchin said he hoped that the two parties would find no agreement to stop the last round of import duties hitting $ 50 billion worth of goods. Beijing abstains from harshness, and Deputy Prime Minister limited himself to saying that the country will defend its interests, which means retaliatory duties for $ 3 billion. The WSJ reports that talks on increasing US access to the Chinese market are underway at the border with recent disputes. It looks like nobody here is concerned about unleashing a global trade war, and the US administration is looking for ways to soften trade partners for new benefits. We have seen this already in the case of NAFTA negotiations with Canada and Mexico, now it applies to China, although Beijing might not that easily adhere to Washington's demands. For some time we will witness scuffles, during which bitter words and threats will be repeated. And here is the main threat to the markets. Behind every threat and blackmail goes a media storm that will break into the tops of newspapers and news websites. In the last past, the macro-data demonstrating a solid attitude of recovery was the counterweight. With retreating PMI indexes, this protection now does not work. Today, in the absence of planned data and events, the market will be tempted to recover the Friday sell-off of risky assets, but in general cautious approach is still recommended.
The last week of March and the closing of the quarter are ahead of us, which may cause violate trading conditions during the next few days. The upcoming Easter may affect liquidity. Today, some attention may be devoted to the speeches of ECB representatives (Weidmann, Nouy) and Fed (Dudley, Mester).
Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The bulls were too weak to rally above the short-term technical resistance at the level of 90.37, so the bears have pushed the market below the technical support at the level of 89.41, which means the price is out of the main channel. The momentum is weak, so the next level to watch for the support is at the level of 88.45.
