Xi Looks South: China’s Pivot to ASEAN Adds New Trade Dimension

*Volatility is Here to Stay – With erratic U.S. policy and no breakthrough in sight, markets will likely remain unstable.

*Safe-Haven Flow Dominates – As uncertainty mounts, expect continued inflows into gold, Yen, and Swiss Franc.

*Watch Southeast Asia – Chinas growing engagement with regional economies could shift global supply chains and complicate Western trade strategies.

Market Summary

Markets remain gripped by volatility as U.S.-China trade tensions intensify. Washingtons imposition of 145% tariffs met with a 125% retaliation from Beijing, effectively freezing bilateral trade and triggering broad risk-off sentiment globally. Confusion deepens as the U.S. mixes temporary tech exemptions with fresh threats—particularly aimed at semiconductors—shaking investor confidence.

Safe-haven demand surged: gold pierced the $3,000/oz milestone, while the Japanese Yen and Swiss Franc climbed to multi-month highs. Meanwhile, Bitcoins status as a risk hedge remained shaky, hovering between $74K and $85K. Risk assets suffered as the S&P 500 dropped 4.3% this month, with tech names like Apple and Nvidia under pressure amid tariff uncertainty. The Dollar Index fell to 99.44, its lowest since July 2023, driven by rising expectations of Fed rate cuts and a lack of clarity on trade direction. Major currencies like GBP and EUR rallied on dollar weakness.

Geopolitically, Chinese President Xi Jinping‘s diplomatic push across Southeast Asia signals a strategic pivot, strengthening regional ties with countries like Malaysia, Vietnam, and Indonesia. As Xi remains silent on the latest tariffs, investors interpret the move as either strategic patience or a shift in focus to regional alliances.

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

Source: CME Fedwatch Tool

0 bps (85%) VS -25 bps (15%)

Market Movements

DOLLAR_INDX, H4

The U.S. Dollar Index remained largely flat after touching a three-year low, as investor sentiment was weighed down by President Donald Trumps erratic tariff policies, which continue to cast doubt on the U.S. economic outlook. Federal Reserve Governor Christopher Waller noted that these tariffs pose a significant economic risk that may prompt the Fed to cut interest rates—even if inflation stays elevated—to avoid a recession. For now, trade war developments have slowed, with Chinese President Xi Jinping touring Southeast Asia in a bid to strengthen regional partnerships. Investors remain cautious, watching for any new updates that could influence dollar movements

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 30, suggesting the index might extend losses after breakout since the RSI stays below the midline.

Resistance level: 102.95, 106.80

Support level: 99.65, 95.85

XAU/USD, H4

Gold prices pulled back as easing trade tensions led to profit-taking on record-high safe-haven demand. The lack of fresh escalation and Trumps suggestion of exemptions on auto-related tariffs have eased concerns for now. Although the U.S. has imposed a 145% tariff on Chinese goods, China has yet to respond, signaling possible internal discussions and a more measured approach. This shift has prompted some investors to rotate out of gold as immediate geopolitical risks appear to fade.

Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 65, suggesting the commodity might enter overbought territory.

Resistance level: 3220.00, 3290.00

Support level: 3165.00, 3130.00

USD/JPY, H4:

The Japanese yen remains supported as investors adopt a cautious stance following the Trump administration‘s decision to implement a 90-day pause on new tariffs and signal a willingness to re-engage in trade negotiations. The move has left markets in a holding pattern, with traders wary of potential policy shifts from the newly inaugurated U.S. president. Despite the yen’s resilience, improving risk sentiment—evident in recent gains across U.S. equities and digital assets—could weigh on demand for haven currencies. A sustained break above the 144.30 level in USD/JPY may be viewed as a signal of bullish momentum and a potential trend reversal for the pair.

USD/JPY is now trading in a higher-high pattern after the pair dipped to a new low in 2025, suggesting a potential technical rebound ahead. The RSI remains below the 50 level, while the MACD has formed a golden cross at the bottom—indicating that the pair continues to trade with underlying bearish momentum.

Resistance level: 145.20, 147.60

Support level: 141.90, 140.40