Market Overview
The latest U.S. tariff implementations are shaking global markets, triggering intense volatility. Key measures include a 10% baseline tariff on all imports (excluding Canada, Mexico, and Belarus), a 25% tariff on non-USMCA-compliant automotive imports, and increased aluminum and steel tariffs under Section 232. Additionally, reciprocal tariffs are targeting over 60 countries, with China facing 34%, the EU 20%, and Cambodia 49%, among others.
In retaliation, countries like China are imposing export controls on rare earth metals, while the EU is planning $8B in duties on U.S. goods. These escalating tensions suggest a looming trade war and pose major implications for global markets.
Fed Chair Jerome Powell acknowledged the unexpectedly large economic impact, citing potential for higher inflation and slower growth. Markets are already pricing in a 34% chance of a -25 bps rate cut post the May FOMC meeting. These shifts in economic indicators point to uncertainty, inflation, and a rapidly evolving financial landscape.
Market Analysis
GOLD
Gold prices have become extremely volatile. Despite a strong bullish engulfing candle during the Asian session, the MACD and RSI indicate selling pressure. This contradiction may reflect a temporary profit-taking cycle, where investors liquidate gold to cover margin calls or rebalance portfolios.
The unusual sell-off, amid a bullish fundamental backdrop, points to market uncertainty. For now, traders should wait for stabilization before re-entering. High volatility makes trade timing risky, and without clear confirmation, it’s best to avoid entries.
SILVER
Silver mimicked gold’s move, showing aggressive selling after a brief rally. Both the MACD and RSI point to strong bearish momentum. While silver typically acts as a hedge during gold rallies, it’s now being dragged down in tandem.
Traders should watch for consolidation zones and look for potential breakout entries once volume stabilizes.
DXY (US Dollar Index)
The U.S. Dollar surged on tariff news but still sits within a larger bearish structure. MACD shows bullish volume, and RSI is normalizing—but resistance at the EMA200 remains intact. Until this level is broken, the longer-term outlook stays neutral to bearish.
Stay cautious. A breakout entry could be triggered if the DXY closes convincingly above 105.00, but the move could easily reverse amid geopolitical pressure.
GBPUSD
The Pound reversed last week’s momentum, now showing a full bearish turn. The MACD and RSI both reflect a surge in selling volume and momentum.
As a major currency pair, GBPUSD is highly sensitive to global shifts. Short setups could present themselves soon, especially if a bullish engulfing pattern fails to form in the next few sessions.
AUDUSD
The Aussie continues to weaken amid global risk aversion. The MACD and RSI both indicate rising bearish momentum. While there’s a chance for temporary bounces, the prevailing sentiment is risk-off, favoring further downside.
Watch for retests of resistance at EMA levels before shorting. Trade timing is essential in this fast-shifting market.
NZDUSD
Like the Aussie, the Kiwi reversed its earlier bullish outlook. The MACD and RSI now support renewed bearish pressure. The shift to risk-off sentiment underscores the pair’s vulnerability.
Conservative short setups are preferred here, with potential breakout entries on a close below 0.5700.
EURUSD
The Euro is under pressure following tariff-related news targeting the EU. Unless the U.S. and EU initiate discussions to reverse reciprocal tariffs, we anticipate continued weakness.
The MACD and RSI confirm the bearish sentiment. Bearish continuation setups are likely, but a confirmed bullish engulfing reversal would shift bias.
USDJPY
The Yen is emerging as a safe-haven alternative. Price action shows strength, while MACD and RSI reflect growing downside potential for USDJPY.
Despite stagnation in price, buyers lack momentum, indicating bearish continuation. Short setups are valid, but trade timing must be precise to avoid whipsaws.
USDCHF
Like the Yen, the Swiss Franc is showing strength against the Dollar. The MACD and RSI indicate more downside movement. The pair is now a key hedge vehicle for investors avoiding Dollar exposure.
A clean break below recent lows could open space for strong breakout entries.
USDCAD
CAD remains fragile but is showing signs of strength. Price touched the EMA200 and bottom of the consolidation range. MACD and RSI show rising bullish momentum.
A move back above EMA200 would signal a bullish shift. Until then, traders should be patient. If price closes firmly above 1.3580, breakout entries to the upside may be justified.
COT Report Sentiment Overview
COT (Commitment of Traders) positioning gives valuable insights for macro-based trade timing:
- AUD – WEAK (4/5)
- GBP – WEAK (3/5)
- CAD – WEAK (5/5)
- EUR – WEAK (3/5)
- JPY – STRONG (5/5)
- CHF – WEAK (5/5)
- USD – STRONG (5/5)
- NZD – WEAK (5/5)
- GOLD – STRONG (5/5)
- SILVER – WEAK (3/5)
With the USD gaining traction, yet the market remaining structurally fragile, align your strategy with momentum but prepare for sharp reversals.
Final Thoughts
This week’s tariff-driven volatility is a stark reminder of how quickly macroeconomic policy shifts can shake markets. Safe havens like gold, the Yen, and the Franc are gaining traction, while major currency pairs like GBPUSD and EURUSD show growing weakness.
Use clear economic indicators and wait for strong confirmation before entering trades. Breakout entries are viable, but only with volume and structure support. Watch for bullish engulfing patterns in consolidation zones to time entries with precision.
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