Tariff Wars: Truce in the Fog
#EURAUD
Key zone: 1.7700 - 1.7780
Buy: 1.7820 (on a strong breakdown of 1.78); target 1.8050-1.8100; StopLoss 1.7750
Sell: 1.7680 (on strong negative fundamentals); target 1.7500; StopLoss 1.7750
After two days of negotiations in Stockholm, the Chinese team stated that talks with the US were constructive. US Treasury Secretary Bessent gave a more optimistic assessment, but markets no longer believe him. Neither side discloses details of the discussions or any official agreements to avoid alarming big capital.
It was stated that both sides recognize the importance of maintaining healthy trade relations and exchanged views on macroeconomic issues. Xi Jinping finally invited Trump to visit Beijing.
Negotiations are virtually ongoing, but the technical details of suspending tariffs on China remain non-public. For instance, China categorically refuses to admit it has a production surplus critically affecting cooperation with the US.
The problem is that China knows how to conduct such discussions indefinitely without even making promises. The US simply doesn't have the time to endlessly play diplomatic ping-pong, so Trump might suddenly make an aggressive and extremely unfavorable decision for himself.
• The US is trying to separate export control from trade, especially since there is no formal mutual agreement on export controls with China.
• Bessent said that supplies of rare earth metals from China have stabilized, but this is almost impossible to verify.
• Both sides expressed regret over China's sale of dual-use technologies.
The US expressed concern over:
• China's purchase of Iranian oil.
• China's excess production capacity around the world.
There has been no reaction from Beijing to such statements.
Trump hopes Europe will impose tariffs on Chinese goods, but in that case, the US gain would be minimal, and China will find 150 ways to minimize its own losses.
At the moment, Beijing has rejected US demands to give up Russian oil. China will defend its energy sovereignty despite the threat of high tariffs.
The rise in oil prices due to fears of disrupted Russian supply continues, and Brent may well rise above the $73 zone. But let’s not forget OPEC+ strategy, so counting on a long-term bull trend isn’t advised yet.
For now, the only thing we can be sure of is that the parties agreed on another 90-day truce. We’re not supposed to know more – and honestly, we don’t really want to. Let’s wait and see what happens after August 1.
In the meantime, speculators are preparing for the Fed meeting and Powell’s solo performance. Expectations are extremely negative, the stakes are high, the dollar is weak, and Trump is unpredictable.
So we act wisely and avoid unnecessary risks.
Profits to y’all!
