Trump Announces Reciprocal Tariffs, USD Tests Support

Trump Tariff, US Dollar Talking Points:

President Trump has announced reciprocal tariffs, saying “whatever they charge us we will charge them.” He also said that the US will consider countries using a VAT tax as a tariff for reciprocal tariffs, which would apply to Europe. And Trump has also said that a tariff on automobiles are coming soon, which will be stacked on top of reciprocal tariffs.
Earlier in the day, the Dollar was dashed on media reports that tariffs wouldn’t be implemented until April 1^st, but famously Trump has walked back similar reports multiple times. So, caution is still warranted into the end of the week.
The fact that the Dollar didn’t rally more on the reciprocal tariff announcement implies that markets are expecting President Trump to use this as a negotiation chip rather than wanting to implement tariffs anytime soon. But he’s shown a penchant for Friday announcements that can lead to weekend anxiety and gaps-down the following week, on top of weekend commentary on the topic such as when he first mentioned the idea of tariffs on Europe.

DXY is back to 107.35 and so far, that’s held the daily low for today. The backdrop around tariffs remains opaque, as I looked at in the above video, and this will likely remain as a driving factor in FX markets, which could have related implications elsewhere like commodities and equities.

From the weekly chart of DXY, we can see how important that level has been, holding support for now the fourth consecutive week in DXY. Notably, Trump has had quite a bit to say on Fridays of late and given today’s announcement around reciprocal tariffs, that potential remains. If he does highlight a possibly earlier start date, particularly for Europe, there could be a USD-strength impact to appear.

U.S. Dollar Weekly Price Chart

Chart prepared by James Stanley; data derived from Tradingview

USD Shorter-Term

To say that this is a volatile situation would appear an understatement. As I discussed in this week’s webinar the dominance of headlines and the tariff topic have seemed to eclipse strong U.S. inflation data, to the point that the U.S. Dollar has shown weakness even with markets pricing out rate cuts for later this year.

It’s been a busy couple of days, and I’ve recapped some of the larger events on the below 30-minute chart of DXY.

U.S. Dollar 30-Minute Chart

Chart prepared by James Stanley; data derived from Tradingview

EUR/USD

When I looked at the Euro yesterday I highlighted the shorter-term bullish bias in the pair as there’s been a penchant for sellers to dry up below the 1.0300 handle. So far this week it’s been another failed run from bears and the pair is now testing a fresh two-week-high.

As I looked at in the webinar, chasing could be a challenge here – but pullbacks and responses to higher-low support could be an opening for USD-weakness setups. The next level overhead is the 1.0457 Fibonacci level, and for support, the prior resistance at the confluent 1.0407 zone looms large. For next resistance, above the 1.0500 handle is the 1.0533 Fibonacci level that set the January high.

EUR/USD Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.