Market sentiment remains slightly positive early Monday as investors digest mixed signals on the US-China trade front. Over the weekend, the Trump administration offered some relief to global tech firms, including computer and smartphone manufacturers, by reducing proposed tariffs to 20% from the previously feared 145% on imports from China. On a more positive note, China’s stronger-than-expected March export data and signals of more economic stimulus—including potential rate cuts by the PBoC—offered some support. Progress in US-Iran talks also contributed to a mildly positive start to the holiday-shortened trading week, which includes Good Friday.
However, China's lukewarm response, alongside unclear messaging from the White House regarding tariffs on semiconductors, has kept investors cautious. Additionally, Beijing’s announcement of a 125% tariff on US goods and its suspension of seven rare earth shipments added pressure to the market’s optimism.
Further weighing on sentiment were warnings from Bridgewater Associates founder Ray Dalio and German Chancellor-in-waiting Friedrich Merz, both of whom flagged the risk of a global recession due to the ongoing tariff tensions. Geopolitical concerns also linger, with Germany reportedly preparing to send Taurus cruise missiles to Ukraine, a move that could escalate tensions with Russia.
Meanwhile, the US Dollar remains under pressure after weak US inflation data from last week, combined with ongoing trade and geopolitical uncertainties, have sparked concerns over a possible US recession and have dented the Greenback. This environment challenges the Federal Reserve’s stance and adds pressure to avoid further rate cuts while supporting growth.
As a result, the US Dollar’s weakness and easing tariff fears helped major currencies, Antipodeans, and commodities rally last week. EURUSD remains firm near its highest level since February 2022, and GBPUSD continues its five-day winning streak. The USDJPY remains under pressure, hitting a 6.5-month low, while AUDUSD and USDCAD remain range-bound. NZDUSD, however, hit a fresh four-month high.
Gold has pulled back slightly from record highs, crude oil extends its Friday rebound with minor gains, and cryptocurrencies continue to trade within recent ranges.
Despite a lack of major positive developments from Europe and the UK, both EURUSD and GBPUSD remain firm following a strong performance last week. The strength in these currency pairs is largely driven by broad US Dollar weakness and relief stemming from Trump’s softened global tariff stance.
Adding to the support are upbeat UK housing market figures and optimism surrounding potential US-EU and US-UK trade agreements. However, momentum is being tested as markets turn cautious ahead of key events—namely, Thursday’s ECB policy decision, and upcoming UK employment and inflation reports. Mixed signals from the ongoing US-China trade tensions further cloud the outlook, keeping traders alert and limiting aggressive bullish moves in the short term.
USDJPY continues to slide, hitting its lowest level in over six months as sellers remain in control. The move is driven by multiple factors: a broadly weaker US Dollar, growing monetary policy divergence between the Fed and the BoJ, and increased demand for the safe-haven Yen amid escalating global trade war fears. Adding pressure to the pair are fading hopes for a US-Japan trade deal, following cautious remarks from BoJ Governor Ueda and Japan’s Economy Minister Ishiba. However, the bearish momentum faces some resistance from softer-than-expected revisions in Japan’s industrial production, which slightly dampened confidence in the Yen. Overall, mixed market sentiment keeps traders on alert, but the broader trend continues to favor Yen strength.
The Australian, New Zealand, and Canadian Dollars are finding it difficult to build on last week’s gains, primarily due to their close economic ties with China and lingering uncertainty over the US-China trade tensions. These currencies, often grouped as the Antipodeans, are also weighed down by a generally dovish tone from their respective central banks.
Despite this, NZDUSD managed to refresh a four-month high, supported by upbeat domestic data, including stronger retail card spending and services PMI figures. In contrast, AUDUSD and USDCAD have shown limited momentum.
Meanwhile, a recent rebound in crude oil prices—Canada’s major export—adds further pressure on USDCAD, contributing to the pair’s mild downside bias.
Gold snapped a four-day winning streak on Monday, posting mild losses just below Friday’s record high. The pullback reflects lingering uncertainty around global tariffs and a light economic calendar. Still, the precious metal remains supported by its safe-haven appeal, strong demand from China, and ongoing US Dollar weakness.
Meanwhile, crude oil edges higher, building on Friday’s rebound. Prices are supported by progress in US-Iran nuclear talks, although gains are capped by market doubts over future oil output policies from both the US and OPEC+.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) post mild gains after ending a two-day winning streak. The modest rebound comes as investor optimism grows around the Fed’s potential readiness to step in and stabilize crypto markets if needed. However, broader concerns over global trade tensions continue to cap upside momentum.
Although the “Good Friday” holiday and a light calendar may slow momentum on Monday, several high-impact events are set to drive market sentiment as the week progresses. Traders will closely watch monetary policy announcements from the European Central Bank (ECB) and the Bank of Canada (BoC), a speech from Fed Chair Jerome Powell, and key US Retail Sales data. Additionally, the UK’s employment and inflation figures are likely to stir movement in the pound.
Outside the major economies, India’s inflation report, OPEC’s monthly oil market outlook, and remarks from mid-tier Federal Reserve officials may offer smaller catalysts. However, the spotlight will remain on US President Donald Trump’s tariff announcements and global reactions, which are likely to shape risk appetite.
Given the recent string of weak US economic data and growing concerns about a tariff-induced recession, bearish pressure on the US Dollar may persist. This could help extend last week’s gains across major currencies, commodities, and the Antipodeans—unless unexpected developments spark a shift in market direction. It should be noted that the USDJPY bears are currently targeting the previous year's low of around 139.60.
May the trading luck be with you!
