Technical Analysis Today

[Zerologic]

USD/CNH surges after Trump tariff announcement

Financial markets have been volatile since Trump’s tariff announcement. White House report says studies have repeatedly shown tariffs are an effective tool for achieving economic and strategic objectives

The report claims that in 2024, studies found that Trump’s tariffs strengthened the US economy and led to reshoring in sectors like manufacturing and steel production.

A 2023 report by the US International Trade Commission found that Trump’s tariffs reduced Chinese imports and stimulated more US production of affected goods.

According to the Economic Policy Institute, President Trump's tariffs during his first term “have shown no apparent correlation with inflation” and have had only a temporary impact on overall prices.

The White House report stated that the media's prediction was wrong, unlike what has been feared so far about high inflation.

Despite the positive report from the White House, according to the CME group's Fedwatch tool, the Fed at its May 7 meeting is still expected to maintain interest rates at 4.25%-4.50% with a probability level of 91.1%.

The dollar index (DXY), which tracks the USD against six major currencies, dropped, drawing a bearish candle with a low of 103.366, a high of 104.314, and a close of 103.802.

Today, investors will focus on US economic data on Unemployment Claims and PMI, which may get a market response.

 

[Zerologic]

Significant USD/CAD drop due to Trump tariffs

The Canadian dollar rallied sharply after the Trump administration’s “Liberation Day” tariff announcement. USDCAD hit a 3-month low at 1.40376 by drawing a long-bodied bearish candle and a fairly long wick at the bottom of the candle. Yesterday, the price made a high of 1.43189, a low of 1.40276, and a close of 1.40822.

The Trump administration’s tariff announcement received a surprising response from the market. The USD came under pressure, instead of acting as a safe-haven in the past. The dollar index (DXY), which tracks the USD against a basket of six major currencies, plunged with a wide gap to a low of 101.267 from a high of 103.379. The gap was quite deep, from the previous close of 103.691 to open at 103.148. The RSI shows that the DXY is currently in the oversold zone.

Unlike normal times, the USD often acts as a safe-haven currency with investors rushing to buy USD, but these are not normal times. The US Dollar is under pressure from the Trump administration's latest tariffs, which will be implemented in a gradual but rapid period.

The Trump administration will impose a 10% across-the-board tariff on all goods imported into the US starting April 5. The “reciprocal tariffs,” calculated as the ratio of US imports to exports on a per-country basis, will go into effect on April 9.

Canada has retaliated with its own potential tariffs if US trade falls outside its own USMCA limits, although Canada and Mexico have been granted additional tariff relief.

Fed officials, on the other hand, have been outspoken in warning that the tariffs could hurt expectations of a rate cut. The probability of the Fed keeping rates on hold at its May 7 meeting has fallen from 91% to 75.4%, according to the CME Group’s Fedwatch tool, given the impact of the Trump administration’s tariff opening report.

The forex market, however, is highly sensitive to recent news update. Investors will be looking ahead to the release of US and Canadian economic data due later today, including the NFP and Unemployment Rate, as well as any subtle hints from Fed Chair Powell's speech on the outlook for US interest rates and the US economy.

 

[Zerologic]

Trump Tariff Impact, WTI Prices Plunge to Low 60.21

WTI oil prices have declined consecutively for four days, with two days of long declines. On Friday, April 4, WTI oil prices plunged, drawing a long-bodied bearish candle with a wick at the bottom of the candle. WTI oil formed a high of 66.56, a low of 60.21, and a closing of 62.03. The decline in prices for four consecutive days even managed to cross the lower band line, indicating very high volatility.

The decline in oil prices aligns with the implementation of the reciprocal tariff policy announced by the Trump administration, which has sparked concerns about a global economic slowdown.

Although the Trump administration has prohibited affected countries from retaliating against the tariff policy, a trade war may be inevitable which in turn worsens the international trade environment.

A potential tariff war between the US and China will further worsen the outlook for oil demand. China has taken retaliatory steps against Trump's tariff policy by imposing a 34% tariff on American goods starting April 10 in retaliation after President Donald Trump imposed high tariffs on goods from China.

On the other hand, Trump considered his policies to have worked effectively and was proud of the US employment, which he said had soared. The US Department of Labor said there were 228,000 jobs last month, far more than the predicted 130,000. On the other hand, the unemployment rate rose slightly from 4.1% to 4.2%, with average earnings growing 0.3% in March to USD 36, or slightly higher than February.

Meanwhile, International Monetary Fund (IMF) Managing Director Kristalina Georgieva urged the US and its trading partners to work constructively to resolve trade tensions and reduce uncertainty. She warned that the higher import tariffs announced by President Trump were clearly a significant risk to the global outlook at a time of sluggish growth.

Another reason for the decline in oil prices was that OPEC+ surprisingly announced that they would increase production by 411 thousand barrels per day in May.

 

[Zerologic]

Gold price plunges amid trade war and global risk sentiment

Trump's reciprocal tariff policy has had a tremendous impact on the financial market. Many stocks have plunged after President Donald Trump implemented tariffs. Gold has depreciated for three consecutive days, drawing bearish candles. Yesterday, gold closed lower at 2956 near the 50 MA, which could be a support zone in this area. The price has formed a high of 3054, a low of 2956, and a close of 2982 on the FXOpen platform. The long body of the candlestick reflects the high volatility that has occurred.

The impact of President Donald Trump's reciprocal tariffs on Wednesday brought the US dollar and other safe-haven currencies after the USD hit a six-month low. The dollar index (DXY) is now at a high of 103.584, up from a low of 102.540, which had reached its lowest level at 101.267.

Last Friday, China retaliated by imposing 34% tariffs on all US imports, triggering turmoil in financial markets as most global equity indices posted losses. Trump’s reciprocal tariffs appear to have caused most markets to plunge, but on the other hand, US Treasury yields have risen, with the 10-year bond up almost fifteen basis points to 4.15% at the last update on April 7. The 20-year bond also rose by 0.15% and the 30-year by 0.17%.

Ahead of the week, the US economic docket will feature the release of the Federal Open Market Committee (FOMC) meeting minutes, followed by the release of consumer and producer inflation data.

Tariff-related developments and trends across all assets will dominate the scene over the next few days. At the moment, the USD is still likely to see some uptick in demand, but that could change given the main fear is that tariffs will lead to higher inflation along with an economic recession. Markets are predicting a bleak future for the US, which will have implications for all other major economies.

 

[Zerologic]

Australian dollar strengthens as Donald Trump suddenly delays tariffs for 90 days

Donald Trump's tariff retort has rocked financial markets again. United States (US) President Donald Trump announced a 90-day pause on implementing new tariffs for several countries on Wednesday local time.

The delay has caused the USD to weaken again, the AUD/USD pair is seen rising, drawing a bullish candle that is longer than the previous bearish candle. The price formed a high of 0.61758 low of 0.59134, closing at 0.61473.

In Trump's post on Truth Social, he decided to delay the implementation of tariffs in full to more than 75 countries because these countries have contacted US officials to negotiate to find the right solution to the trade problems that he has conveyed in the implementation of the new duties.

Trump also wrote that he would raise tariffs on imported goods from China to 125%, effective immediately. The tariff increase for China was imposed because Beijing was considered to be less respectful of the World Market.

On the other hand, China has again retaliated by raising import tariffs on US goods to 80% from 34%, which will take effect on April 10.

Fed officials noted that uncertainty surrounding trade dynamics and inflation limits their ability to move quickly on interest rates. Barkin of the Richmond Fed and Musalem of the St. Louis Fed emphasized that tariffs complicate the policy landscape and could delay future interest rate adjustments.

According to the CME group's Fedwatch tool, the probability of the Fed leaving interest rates unchanged has increased by 83.0%, while the probability of a rate cut is only 17.0%, which had previously increased due to Trump's reciprocal policy.

The dollar index (DXY), which tracks the USD against six major currencies, had fallen to a low of 101.837, which then rose to close at 102.993 in response to the tariff delay. Visually, DXY is still moving below EMA 2,0, reflecting bearish sentiment.

Today, investors will focus on several US economic indicators for CPI and unemployment claims, and RBA Gov Bullock Speaks Due to speak at the Chief Executive Women 40th Anniversary Melbourne Annual Dinner.