EUR/USD. The world is on the verge of a global US-China confrontation

In the past two years, only the lazy one has not paid attention to the confrontation between China and the United States. There has always been hostility between major and superpowers. That's not news. However, from time to time, relations heat up and then the whole world freezes in anticipation of events and their consequences. Now is the time. In general, 2020 can be called the year of cataclysms and emergencies. Now even the trade war between China and the United States, which began back in 2018, does not look like something serious. Not to mention the Ebola virus and the swine flu epidemic. However, we have to keep looking ahead and keep asking questions, what will the world expect in the near future? Because the answers to these questions will also suggest what the currency market is waiting for.

The conflict between the United States and China continues to heat up. The parties have accumulated too many claims against each other. Moreover, if earlier these claims came mainly from the US and were more of a verbal rather than effective nature, now both sides are actively imposing sanctions against each other and accuse each other of all mortal sins. The most interesting part is that there is no evidence of guilt of one or the other. And it is absolutely certain that no one will ever provide this evidence to the broad masses. That is, in fact, the truth does not matter, because the truth is a relative concept. In every conflict, each side has its own truth. There is one truth. But when the national interests and the future of the country is the priority, the truth does not matter. The main thing is to win, to win in this confrontation, in this war. This is exactly what happens constantly between all the big (and not large) players. At this time, the whole world is trying to recover from the "Chinese" virus. Moreover, the virus was somehow defeated too quickly in China itself, or the Chinese government is openly hiding a lot of what is happening now on their territory. Considering that China is one communist party, it is not at all surprising if the coronavirus is also present in the PRC, it is just that the government is hiding this information from the whole world. Actually, Washington is accusing Beijing of withholding information. And in collusion with the World Health Organization, which the US has already cut ties with. Now, who can say how, why, and under what circumstances the virus left the lab in Wuhan? Who can say with certainty that it was an accident or vice versa? However, it is also impossible to deny the fact that China is to blame for this, since it was from its laboratory that the virus "escaped". And now the whole world quite reasonably can and should bill China. True, it is not clear in what form it will be. In international law, there are no articles and laws that would determine the procedure for action and penalties in such a global event as an epidemic. However, one thing is an incomprehensible and unexplored virus that came out of nowhere. The other is a laboratory-created virus that has broken free. Thus, the whole world has the right to make claims to China.

The second very important and controversial point is Hong Kong. And here, too, the US is not the only one who has claims. The United Kingdom, the European Union, Canada, and Australia also have complaints over the Chinese government's violation of Hong Kong's autonomy. Of course, this is not a question of coronavirus issue, but more and more experts are beginning to note that China has begun to violate the principles of international law too often and grossly, and the damage that COVID-2019 has caused to the entire world is generally difficult to calculate. All this can, on the one hand, lead to a serious conflict between the US and China, including disconnecting the latter from the SWIFT international payment system, introducing new portions of sanctions and duties, a diplomatic war, and so on. On the other hand, the whole world can turn against China, or at least the most developed and powerful countries that can afford to cut ties with China or at least reduce their dependence on Chinese imports. Two points should also be noted here. First, more and more political scientists believe that China has set a course to become the only superpower in the world. Second, the United States has set a course to form a coalition against China. Of course, neither Donald Trump nor XI Jinping will publicly declare such intentions. However, US Secretary of State Mike Pompeo, who met with Dominic Raab in London this week, has already begun to hint at the creation of an anti-Chinese coalition. Pompeo was extremely correct in expressing his thoughts at the press conference, but still noted that the actions of the Chinese Communist party contradict the principles of world law and order and the creation of a coalition can convince Beijing of the inexpediency of such a foreign and domestic policy. Mike Pompeo recalled, in addition to the coronavirus and Hong Kong, the conflict in the South China sea, the standoff between India and China, and attempts to steal intellectual property by Chinese hackers on the orders of the authorities of this country.

The last question is generally very complex and it is not clear whether Chinese hackers made an attempt to steal confidential information about the development of vaccines and drugs against the coronavirus, or whether this was the case of the US intelligence services. Recall that not so long ago in the United States, an employee of the laboratory in Wuhan allegedly escaped from China spoke about the actions and orders of the Communist Party of the People's Republic of China, as well as that of the transmissibility and contagiousness of the virus COVID Chinese government knew almost the very beginning. The speech is interesting, but it is hard to believe that the employees of the most important laboratory in the world in 2020, which attracts the attention of the whole world, were able to get out of China so easily and simply. Now, a press release has been posted on the website of the US Department of Justice, which says that two Chinese hackers have been charged with hacking aimed at obtaining secret information about COVID-19 research. It is noted that hackers have a huge track record. Previously, they stole information and developments from other technologically advanced countries, such as Australia, Belgium, Germany, Japan, Lithuania, Spain, and others.

In general, we believe that the conflict between America and China will not de-escalate in the near future. Moreover, before January 2021 (when the president may change in the United States), the conflict may go so far that it will take years to soften it and return to the levels of relations in 2016-2017. Even if Joe Biden wins the presidential race, it will not mean that relations with China will get better. First, Joe Biden is not the only one who will decide on the fate of China, but there is also the Congress and the Senate, which in any case will be crowded with Republicans. Secondly, it is possible that Beijing itself simply does not want to establish relations with Washington.

Trading recommendations for the EUR/USD pair:

The technical picture of the EUR/USD pair shows that the price continues its upward movement and overcame all resistance levels last week, but no intelligible correction has begun. Thus, buy orders remain relevant, and targets will be formed at the beginning of a new trading week, at its opening. It will be possible to consider selling the pair with minimum lots if the price consolidates below the Kijun-sen line with the first target being the Senkou Span B line.