U.S.-China Trade Tensions Intensify, Eyes on Safe-Haven

Market Summary

Global markets remain on edge as U.S.-China trade tensions escalate further, with President Trump pushing forward with sweeping tariffs on key U.S. trading partners, prompting a firm retaliatory response from Beijing. The latest flare-up came as China instructed its airlines to halt further purchases of Boeing Co. jets, signaling deepening strains. Meanwhile, the U.S. launched a probe into tariffs on critical mineral imports, widely seen as targeting Chinese industry dominance.

This sharp deterioration in trade relations has driven investors toward safe-haven assets. Gold surged to a fresh all-time high above $3,270, reflecting strong demand amid uncertainty. Likewise, the Japanese Yen and Swiss Franc appreciated against most G7 currencies as risk-off sentiment intensified.

In contrast, both the euro and British pound have shown resilience, benefiting from improving sentiment around European fundamentals. Today’s focus turns to eurozone and UK CPI readings, which are expected to be key catalysts for EUR and GBP. Strong inflation data could reinforce expectations of tighter monetary policy, potentially offering further support to both currencies. However, any downside surprises may reignite pressure amid the broader global uncertainty.

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

Source: CME Fedwatch Tool

0 bps (81.6%) VS -25 bps (18.4%)

Market Overview

Economic Calendar

(MT4 System Time)

Source: MQL5 

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Market Movements

DOLLAR_INDX, H4

The U.S. Dollar Index stayed flat amid a quiet economic calendar, with traders eyeing upcoming U.S. data—Core Retail Sales, Retail Sales, and the Fed statement—for direction. On the trade front, Chinese President Xi Jinping signed 45 cooperation deals with Vietnam during his Southeast Asia tour, which also includes Malaysia and Cambodia. As tensions with the U.S. rise, Beijing is strengthening regional ties, though investors remain cautious with few details released ahead of Xi’s Malaysia visit.

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: 99.55, 95.85

XAU/USD, H4

Gold hit a record high, breaking above the Fibonacci resistance at 3225.00, as market uncertainty drove safe-haven demand. While Trump’s 145% tariffs on Chinese goods continue to pressure sentiment, China has yet to retaliate, instead focusing on regional partnerships. Investors remain inclined toward gold as a hedge against political and economic risks.

Gold prices are trading higher after successfully breakout above the previous resistance level. MACD has illustrated diminishing bearish momentum. However, RSI is at 74, suggesting the commodity might enter overbought territory. 

Resistance level:  3295.00, 3385.00

Support level: 3225.00, 3170.00

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GBP/USD，H4

The pound holds firm as traders digest strong UK wage growth and resilient labor data against rising global policy uncertainty. While BoE easing bets persist, sticky inflation tempers expectations of aggressive cuts. Weak U.S. data and a sliding dollar offer support, but caution prevails as markets await clarity on U.S.-Japan trade talks—seen as a test of Trump’s revived tariff push.Institutional sentiment has turned sharply risk-off, with rising cash allocations and recession fears weighing on broader appetite.

GBP/USD remains in a firm uptrend, having rallied sharply from the 1.3085 region, supported by bullish sentiment and ongoing USD softness. Momentum indicators reflect strength with some caution; the RSI stands at 72, signaling overbought conditions, while the MACD remains in bullish alignment with the MACD line above the signal line and positive histogram bars—though a slight fading in momentum is noted as histogram bars begin to shrink.

Resistance level:  1.3260, 1.3310

Support level: 1.3090, 1.3080

EUR/USD , H4

The euro trades cautiously ahead of an expected ECB rate cut, with markets pricing in a dovish pivot amid soft Eurozone sentiment and trade headwinds. While dollar weakness offers a tailwind, the euro’s gains are capped by fears of a broader economic slowdown and fallout from U.S.-China tensions.With investor sentiment turning defensive that evidenced by rising allocations to gold and declining equity exposure, near-term direction will hinge on risk appetite and central bank signals.

EUR/USD remains in a strong uptrend, holding gains above the 1.1300 level after a sharp breakout. Momentum indicators are mixed; the RSI is at 59, showing room for further upside without overbought pressure, while the MACD is flat with minimal divergence, indicating a pause in momentum.

Resistance level: 1.1385, 1.1450

Support level: 1.1270, 1.1180

Dow Jones, H4: 

The Dow Jones Industrial Average staged a strong rebound from its yearly low below the 37,000 mark, but now finds itself grappling with a key resistance level just below 41,000, raising concerns about a potential return of bearish momentum. Despite the recovery, market sentiment remains fragile as investors continue to monitor the escalating U.S.-China trade dispute. The situation has worsened with China instructing its domestic airlines to halt Boeing jet purchases, and the U.S. government launching possible new tariffs on critical mineral imports, widely perceived as targeting China’s industrial base. This renewed tension between the world’s two largest economies casts a shadow over the global economic outlook and is deteriorating investors’ risk appetite. 

The Dow has filled the gap that was previously incurred and is yet to reach the previous high, suggesting that the Dow remains trading within its bearish trajectory. The RSI remains below the 50 level, while the MACD has a golden cross at the bottom, suggesting that the bearish momentum is easing. 

Resistance level: 41740.00, 43240.00

Support level: 40000.00, 38040.00

USD/JPY, H4: 

The Japanese yen traded sideways but held steady, underpinned by safe-haven flows and the Bank of Japan’s cautious guidance. The BOJ signaled a potential pause in its tightening cycle if global trade frictions—particularly from aggressive U.S. tariffs—begin to significantly impact economic growth. However, the central bank remains hawkish in the medium term, especially when compared to its global counterparts like the Fed, ECB, and BOE, which are increasingly signaling rate cuts. This divergence continues to support the yen’s relative strength, particularly as trade war anxieties linger.

USD/JPY is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 31, suggesting the pair might extend its losses since the RSI stays below the midline. 

Resistance level: 144.15, 147.40

Support level: 140.65, 137.45

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Crude Oil, H4

Crude oil prices, which staged a strong technical rebound recently on the back of optimism surrounding a potential tariff pause from the Trump administration, are now showing signs of waning momentum.  Markets remain heavily focused on the escalating trade tensions between the U.S. and China, which continue to cloud the global economic outlook and threaten to dampen oil demand.  Compounding the bearish outlook, OPEC is reportedly set to resume full production capacity in Q2, reversing previous supply curbs. The move, aimed at stabilizing the market amid shifting demand dynamics, may instead exacerbate oversupply concerns, putting further downward pressure on oil prices.

Oil prices, after performing a technical rebound, have been sideways lately, a move that could lead to a continuation of a bearish run. The RSI remains below the 50 level while the MACD is attempting to break above the zero line, suggesting that oil prices remain trading with bearish momentum. 

Resistance level:62.00, 63.90

Support level: 59.60, 57.00

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