Trump’s Tariff Threat Lifts Dollar

• The Financial Market was rattled by President Trump's comment on the Steel and Aluminum tariff.

• Eyes on tomorrow's Jerome Powell Testimony for Fed monetary policies.

• Gold remains strong amid heightened uncertainty in the market.

Market Summary

Markets turned volatile last Friday as newly elected U.S. President Donald Trump rattled investors with an aggressive trade stance, signaling a potential 25% tariff on steel and aluminum imports. The move, expected to take immediate effect upon announcement, overshadowed the release of a weaker-than-expected U.S. Nonfarm Payrolls (NFP) report. Despite the jobs data missing estimates at 143k—well below the previous 307k reading—the dollar strengthened, buoyed by Trumps trade rhetoric.

Looking ahead, all eyes are on Federal Reserve Chair Jerome Powells semi-annual testimony before the Senate, which could provide further direction for the greenback. A hawkish stance from Powell may reinforce dollar strength, while any dovish signals could see a shift in sentiment.

Meanwhile, commodity-linked currencies, including the Australian, New Zealand, and Canadian dollars, faced heavy selling pressure in response to Trumps tariff comments, with investors bracing for further details on the policy. Gold, on the other hand, remained resilient near record highs, underpinned by mounting uncertainty and risk aversion.

In the cryptocurrency space, Bitcoin and Ethereum traded flat as broader market risk appetite weakened, prompting investors to pivot toward safe-haven assets. Traders now await further clarity on U.S. trade policy and Powells testimony for cues on market direction.

Current rate hike bets on 19th March Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (91.50%) VS -25 bps (8.5%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index (DXY) has staged a rebound, breaking past its previous high and signaling a potential trend reversal. The greenback found support after stronger-than-expected labor market data, with the unemployment rate and average earnings growth exceeding forecasts. These figures have reinforced confidence in the resilience of the U.S. economy, driving the dollar higher. Investors are now turning their attention to Federal Reserve Chair Jerome Powells semi-annual testimony before Congress on Tuesday and Wednesday. Any hawkish signals could further bolster the dollar, while a more cautious tone may temper its gains.

The Dollar Index has rebounded from its recent lows and surpassed its previous high, suggesting a trend reversal signal for the pair. The RSI has gotten above the 50 level while the MACD is approaching the zero line from below, suggesting that the bearish momentum is vanishing.

Resistance level: 108.90, 109.80

Support level: 107.35, 106.50

XAU/USD, H4

Gold prices have formed a double top near their all-time high, signaling a potential technical correction amid renewed dollar strength. The precious metal came under pressure in the last session as the greenback rallied on the back of stronger-than-expected economic data and a hawkish tilt from the Federal Reserve. With markets now eyeing further gains in the dollar, gold may face additional headwinds. A continuation of the dollar's upward momentum could trigger a near-term pullback for bullion, with traders watching key support levels for potential buying opportunities.

Gold prices are now consolidating at its all-time peak and have formed a double-top, suggesting a potential technical correction for the gold. The RSI has dropped out from the overbought zone while the MACD has crossed on the above and is edging lower, suggesting that the bullish momentum is easing.

Resistance level: 2960.00, 3000.00

Support level: 2820.00, 2775.00

USD/JPY，H4

The USD/JPY pair staged a technical rebound from recent lows as the dollar regained strength in the last session. However, the Japanese yen remains resilient, underpinned by safe-haven demand and reinforced by the Bank of Japan's recent hawkish stance. Should the pair remain below the 152.00 mark, it would indicate that the broader bearish trajectory is still intact.

The USD/JPY remains in a bearish trajectory despite the pair's formation of a double bottom, which may trigger a technical rebound. The RSI shows signs of rebound, while the MACD has crossed at the bottom, suggesting that the bearish momentum is easing.

Resistance level: 154.10, 156.25

Support level: 149.30, 146.30