U.S. To Tax China by 104%, Escalating Trade Tensions

Market Summary

The market continues to trade firmly under a risk-off sentiment, extending losses after a temporary breather on Monday. Investor anxiety resurfaced sharply following President Trump’s renewed tariff threats aimed at China’s retaliatory measures. The hefty levies on Chinese imports, set to take effect Wednesday, have yet to draw a formal response from Beijing—adding to the sense of uncertainty and potential for escalation.

Global equity markets were rattled, plunging to fresh lows as fears mounted over a looming full-scale trade war between the world’s two largest economies. The potential fallout from such tensions poses significant threats to global economic growth, prompting investors to rotate aggressively into safe-haven assets.

Gold surged, holding firmly above the $3,000 level, while the Japanese Yen and Swiss Franc appreciated across the board amid heightened demand for traditional safety plays. Interestingly, despite a notable rise in U.S. long-term Treasury yields, the U.S. dollar sold off sharply, extending losses in today’s Asian session. The move suggests that investors are increasingly prioritizing capital preservation over yield, reflecting a broader shift in global market sentiment.

Meanwhile, oil prices continued to nosedive, pressured by the deteriorating demand outlook driven by escalating trade tensions. WTI crude dropped below the $60.00 mark, touching its lowest level since 2021, as concerns over slowing global growth and oversupply weighed on sentiment.

Overall, with tensions between the U.S. and China showing no signs of easing, markets are likely to remain volatile. Traders will be closely watching for any developments in the tariff standoff that could signal a pivot or further escalation.

---

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 Overview

Economic Calendar

(MT4 System Time)

Source: MQL5 

---

Market Movements

DOLLAR_INDX, H4

The U.S. dollar came under renewed selling pressure as markets reacted to President Trump’s latest escalation in the trade standoff with China. Following Beijing’s retaliatory tariffs in response to Washington’s initial round of levies, Trump doubled down—announcing a sweeping 104% tariff on Chinese imports, set to take effect Wednesday due to the absence of a formal response from the Chinese side. The aggressive stance has shaken investor confidence in the greenback, as market participants fear the intensifying trade conflict could severely dent U.S. economic growth and global trade flows.

The Dollar Index shifted away from the bullish trend and dived below the uptrend support level, suggesting a bearish signal for the index. The RSI is kept at below the 50 level, while the MACD failed to break above the zero line, suggesting that the index remains trading with bearish momentum. 

Resistance level: 103.30, 104.70

Support level: 101.75, 100.25

XAU/USD, H4

Despite sharp declines in equity markets, gold prices have retreated, as some investors liquidated positions to raise cash amid market turmoil. However, the broader outlook for gold remains bullish over the longer term, supported by persistent global uncertainties and the rising probability of extended U.S.-China tensions. With the threat of 104% tariffs looming and no signs of de-escalation, safe-haven demand for gold is expected to strengthen in the coming months.

Gold prices are trading lower while currently testing the upward trendline. However, MACD has illustrated diminishing bearish momentum, while RSI is at 31, suggesting the commodity might experience technical correction since the RSI entered the oversold territory. 

Resistance level:  3005.00, 3060.00

Support level: 2955.00, 2880.00

---

USD/JPY，H4

USD/JPY erased all prior gains and is now hovering near recent lows, reinforcing a bearish bias for the pair. The renewed downside pressure comes as escalating U.S.-China trade tensions weigh heavily on the dollar, with markets increasingly shifting into risk-off mode. Amid heightened uncertainty, investors are flocking to traditional safe-haven assets, and the Japanese Yen is benefiting as capital flows into lower-risk currencies. This dynamic continues to pressure USD/JPY, which may see further downside if geopolitical risks intensify or if upcoming U.S. data fails to surprise to the upside.

The pair has reached its recent low level; a break below this level signals a strong bearish bias for the pair. The RSI is flowing in a lower-high pattern while the MACD is kept below the zero line, suggesting that the pair remains trading with strong bearish momentum. 

Resistance level:  147.00, 151.23

Support level: 143.80, 140.50

EUR/NZD , H4

EUR/NZD surged over 5% in the past five sessions, marking its highest level since 2020 and reinforcing a bullish bias for the pair. The rally is fueled by a combination of euro resilience and continued weakness in the New Zealand dollar. On the euro side, stability prevails as the European Trade Commission ramps up diplomatic efforts to de-escalate trade tensions with the U.S., providing support to the single currency. In contrast, the Kiwi remains under pressure, not only from the broader risk-off sentiment tied to U.S.-China trade friction but also from today’s 25 bps rate cut by the RBNZ, which further weighed on the New Zealand dollar.

The pair has been trading in a higher-high price pattern and is charging toward the critical resistance level at the 2.000 mark; a break above should be a solid bullish signal for the pair. The RSI has gotten into the overbought zone while the MACD is diverging and is heading upward, suggesting that the bullish momentum is gaining. 

Resistance level: 2.0000, 2.0415

Support level: 1.9520, 1.9065

Crude Oil, H4: 

Crude oil has plunged to $57.22, their lowest since 2021 which is driven by recession fears and escalating U.S.-China trade tensions. A 104% U.S. tariff on Chinese imports and rising OPEC+ output signal oversupply risks, while mixed U.S. inventory data points to weak demand. With the White House tolerating lower prices to fight inflation, sentiment remains firmly bearish unless geopolitical or policy shifts emerge.

Crude oil is in a confirmed downtrend after three consecutive losing sessions, settling near a critical inflection zone. Prices are trading around $57.50, holding near recent lows after a sharp sell-off. RSI remains deeply in bearish territory, showing no immediate signs of reversal, while the MACD continues to diverge negatively—reinforcing the strength of the current sell-off.

Resistance level: 61.45, 66.65

Support level: 53.50, 48.45

S&P 500, H4: 

U.S. equities remain highly volatile, with initial rebound attempts quickly reversing as markets react to escalating U.S.-China trade tensions. The S&P 500 fell below the 5,000 mark for the first time in nearly a year, highlighting growing investor anxiety over global economic stability. The renewed market stress follows President Donald Trump’s announcement to impose up to 104% tariffs on a wide range of Chinese goods, effective April 9, reigniting fears of a prolonged trade war between the world’s two largest economies.

S&P 500 is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum. However, RSI is at 21, suggesting the index might experience technical correction in the short-term since the RSI enters oversold territory. 

Resistance level: 5210.00, 5405.00

Support level: 4960.00,  4670.00

---

GBP/USD, H4: 

The British pound rebounded to 1.2800 after optimism around US-UK tariff talks eased earlier selling pressure. A prior 1.2% drop had been driven by risk-off sentiment and USD strength. While the UK remains exposed to President Trump’s proposed 10% tariffs, signs of negotiation which are backed by US Treasury comments to calm investor fears. Nonetheless, economists warn tariffs could cut UK GDP by 0.6%, and the BoE may cut rates soon, with markets expecting up to 75bps in 2025. Meanwhile, the dollar’s outlook is mixed, hinging on Fed expectations and upcoming inflation data.

GBP/USD remains in a corrective downtrend. The pair faces pressure near 1.2825, with upside capped around 1.2875. RSI is hovering around 44, suggesting limited upside without a clear breakout while the MACD shows signs of flattening, suggesting a potential momentum shift. The overall structure favors range-bound trading, with potential for volatility around key macro data releases.

Resistance level: 1.2875, 1.2960

Support level: 1.2785,  1.2695

---