Trump Set to Proceed Reciprocal Tariff

*President Trump announced a reciprocal tariff to take effect on 2nd February, which rattled the financial market.

*Safe-haven Gold remains strong amid uncertainties filling the market.

*BoE holds the interest rate unchanged and helps to buoy the Pound Sterling.

Market Summary

Donald Trump has once again put his aggressive tariff policy at the center of financial market attention, announcing that the proposed reciprocal tariffs and additional sector-specific levies on all U.S. trade partners will take effect on April 2. The move has unsettled markets, fueling fears of a global trade war.

Wall Street lost momentum, reversing its previous rally that was driven by the Fed‘s dovish stance, while the U.S. dollar remained under pressure. The heightened uncertainty in global markets has sparked demand for safe-haven assets, with gold continuing to trade at record highs. The Japanese yen also regained strength as Japan’s inflation rate hit 3%, reinforcing expectations that the Bank of Japan could move toward a more hawkish policy stance.

In the U.K., the Bank of England held interest rates steady as expected but signaled a cautious approach to future policy, citing risks from Trumps trade strategy. This helped buoy the Pound Sterling. Meanwhile, the euro faced headwinds after the eurozone delayed implementing retaliatory tariffs on U.S. alcoholic beverages, a move that weighed on the single currency in the last session.

Current rate hike bets on 7th May Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (83.3%) VS -25 bps (16.7%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index rebounded slightly, supported by stronger-than-expected US economic data. The Initial Jobless Claims report showed 223K new claims, slightly better than the 224K forecast. Additionally, the Philadelphia Fed Manufacturing Index (12.5 vs. 8.8 expected) and Existing Home Sales (4.26M vs. 3.95M expected) exceeded market expectations, further bolstering the dollars strength. However, the long-term outlook remains bearish, as the FOMC reaffirmed plans for rate cuts in 2025. Fed Chair Jerome Powell reiterated concerns over recession risks and trade war uncertainties, which could dampen optimism toward the US economy.

The Dollar Index is trading higher while currently near the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 58, suggesting the index might extend its gains after breakout since the RSI stays above the midline.

Resistance level: 104.05, 104.85

Support level: 103.30, 102.80

XAU/USD, H4

Gold prices remained in consolidation, as mixed market sentiment led investors to adopt a wait-and-see approach. Safe-haven demand for gold was supported by rising trade tensions and recession fears, but stronger US economic data tempered bullish momentum, limiting further upside.

Gold prices are trading flat while currently testing the resistance level. However, MACD has illustrated increasing bearish momentum, while RSI is at 60, experiencing technical correction since the RSI retreated from overbought territory.

Resistance level: 3080.00, 3145.00

Support level: 3035.00, 2990.00

GBP/USD，H4

The GBP/USD pair remains under pressure as global economic uncertainties persist. The Bank of England (BOE) has maintained a cautious stance, keeping rates steady at 4.5%, with markets pricing in over a 50% chance of a rate cut in May. However, the country‘s wage growth at 5.8% continues to outpace inflation, adding to inflationary pressures may delay BoE’s monetary easing plan and support the Cable. Meanwhile, the Federal Reserves firm stance on inflation, with rate cuts likely to be delayed, is strengthening the USD, creating additional downside pressure on GBP/USD.

GBP/USD has pulled back after failing to break above the 1.2995 resistance level, consolidating around 1.2960. A sustained break below these levels could reinforce bearish momentum toward 1.2783. The RSI is sliding while the MACD remains below the signal line, hinting at bearish momentum.

Resistance level: 1.2995, 1.3050

Support level: 1.2934, 1.2853