Market Sentiment Improves and Dollar Gains

Market Summary

The global financial markets found some relief in the last session, as signs of diplomatic overtures emerged following the initial shock of the U.S.s sweeping tariff announcements. Several nations have reportedly initiated negotiations with Washington, seeking exemptions or adjustments to the proposed tariffs. President Trump, in a relatively more conciliatory tone, confirmed that his administration is open to trade discussions — a shift that helped temper risk aversion.

U.S. equities steadied after Mondays steep selloff, with the Dow Jones, S&P 500, and Nasdaq all closing with marginal changes, reflecting a tentative return of investor confidence.

In the commodities market, gold prices came under pressure as the demand for safe-haven assets eased in tandem with improved trade sentiment. The precious metal saw a broad selloff, retreating from its recent highs as market uncertainty receded.

The U.S. dollar regained ground as risk appetite modestly improved and safe-haven flows into the Japanese Yen and Swiss Franc reversed. Both currencies weakened, reflecting the markets shift away from panic and toward a more balanced risk environment.

In the FX space, the New Zealand dollar remained under pressure ahead of the Reserve Bank of New Zealand's (RBNZ) rate decision due tomorrow. Markets are broadly pricing in a 25 basis point cut, a move that would reflect the central banks concerns over weakening external demand and the potential impact of an escalating trade war.

Looking ahead, markets are expected to remain volatile and highly sensitive to any changes in rhetoric or policy signals from the White House. Traders will be closely monitoring developments in U.S. trade diplomacy, as well as key central bank decisions, for cues on market direction.

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

Source: CME Fedwatch Tool

0 bps (63.5%) VS -25 bps (36.5%)

Market Movements

DOLLAR_INDX, H4

The U.S. Dollar Index extended its rebound and formed a higher-high price pattern, breaching its previous resistance and signaling a potential bullish trend reversal. The renewed strength in the greenback came as market sentiment shifted following President Trump‘s remarks that his administration is open to trade negotiations with several nations, aiming for “the best result” after last week’s sweeping tariff rollout. This more conciliatory tone from the White House helped ease fears of a prolonged global trade war and restored some investor confidence in the U.S. economy, lending support to the dollar. If the administration continues to deliver constructive updates on trade discussions, the dollar could maintain its upward momentum in the near term.

The Dollar Index gain passed the Fibonacci retracement of 61.8% which indicated a bullish trend reversal for the index. The RSI climbs higher while the MACD has a golden cross at the bottom, suggesting that the bearish momentum is easing.

Resistance level: 103.30, 104.70

Support level: 101.75, 100.25

XAU/USD, H4

Gold prices have continued to slide in the short term as investors take profits from recent all-time highs and liquidate holdings to raise cash, possibly bracing for further turbulence in the equity markets. Despite prevailing market uncertainty, the short-term pressure reflects a broader repositioning. However, golds long-term outlook remains constructive, underpinned by escalating trade war risks and rising fears of a global economic slowdown.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, RSI is at 34, suggesting the commodity might extend its gains since the RSI rebounded sharply from oversold territory.

Resistance level: 3005.00, 3060.00

Support level: 2955.00, 2880.00

NZD/USD , H4

The NZD/USD has slipped to its lowest level of 2025, though it posted a modest technical rebound in the latest session. Despite the short-term bounce, the pair remains firmly entrenched in its broader bearish trajectory, with no clear signs of a trend reversal just yet. All eyes are now on the Reserve Bank of New Zealands (RBNZ) rate decision scheduled for tomorrow. Markets are widely expecting a 25 basis point rate cut, a move that continues to weigh on sentiment toward the Kiwi. Should the central bank deliver the cut with a dovish tone, the NZD could come under renewed pressure, potentially pushing the pair to fresh lows for the year.

The pair plunged 2% in the last session and extended its loss this week, suggesting a bearish bias for the pair. The RSI remains close to the oversold zone, while the MACD continues to edge lower after breaking below the zero line, suggesting that the bearish momentum is gaining.

Resistance level: 0.5615, 0.5665

Support level: 0.5545, 0.5465