The pair was heavily sold in the past few weeks, with a bounce back expected in the following days. The European Union’s rising nationalism was seen to distort the policies and regulations set fort for the integration of Europe. While Southeast Asia was trying to cope up with Trumps trade war by reviving pacts designed for a free trade area, particularly CPTPP (Comprehensive and Progressive Trans-Pacific Partnership). Histogram and EMA’s 13 and 21 all pointed out to an expected trend reversion.
The pair is waiting for a catalyst that will make the price move. The European Union is seen dividing with no leader in hindsight after Angela Merkel announced that she will no longer run for her party’s leadership as her people was disappointed with her policies towards immigration. She is expected to step down as chancellor of Germany in 2021. However, many investors see this as a transition for a new leadership that would again unite the European Union. Japan on the other hand, was experiencing problem in its economy as the BoJ’s (Bank of Japan) asset (includes Government Bonds and Treasuries) exceeds Japan’s GDP. Any move to increase the interest rate would hurt its economy. Histogram, EMA-13 and EMA-21 was in an indecision, while the MA’s 50 and 200 entered the “Death Cross”.
The pair was encaged in a sideways. The two countries are now looking for another way to counter the United States. Japan is now in talks with China to have a bilateral agreement. Aside from that, Japan together with Australia will lead the ratified CPTPP (Comprehensive and Progressive Trans-Pacific Partnership). On the other hand, Canada is making a bilateral trade negotiation with China, a move that will undermine the recently ratified USMCA (United States, Mexico, Canada). Article 34.6 of the ratified USMCA states that any agreement of the a member to China will lead to the expulsion of the country within the trading agreement with the United States. Histogram and EMA’s 13 and 21 pointed a lower price for the pair.
The pair was expected to bounce back in the short term, still on its path for downtrend. Both Australia and New Zealand consider China as their major trading partner. Australia had made moves to counter China’s aggressiveness in the region by granting more loans to pacific nations that China is trying to lure with their soft loans and grants. It also revived and ratified the CPTPP (Comprehensive and Progressive Trans-Pacific Partenrship) with 6 pout of 11 already signed the ratification, and expected to be official by December 2018. However, the internal conflict on Australia’s leadership is seen by many to undermine the strategies that the current government is trying to do. MA’s 50 and 200 will enter the “death cross”, while histogram, 13-EMA and 21-EMA verified a bounced back from the current price before continuing the decline of the price.