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*Both the U.S. dollar and Wall Street are encouraged by Trump’s tariff policy and jumped in the last session.
*Chinese PMI reading exceeded market expectations, catalysing the Aussie dollar and Oil prices..
*BTC jumped nearly 10% after Trump announced the inclusion of digital assets as the country’s national reserve.
Market Summary
Markets are recalibrating as focus shifts toward Donald Trump’s tariff policies, with a planned 25% levy on Canada and Mexico set to take effect on March 4. The protectionist move is expected to strengthen the U.S. dollar while weighing on the Canadian dollar and Mexican peso. However, in a surprising turn, Wall Street rebounded sharply in the last session, buoyed by Trump’s trade stance. The Nasdaq led the charge, rallying over 1.6%, signaling a potential trend reversal.
Beyond Wall Street, the Hang Seng Index remains a key watch as it continues its bullish momentum. Optimism over AI advancements has fueled equity gains, while reports suggest that Beijing is assembling one of its largest economic stimulus packages in response to escalating trade tensions with the U.S. This could further catalyze gains in Chinese equities.
In the forex market, the euro found strength early in the week amid positive developments surrounding the Russia-Ukraine conflict. Traders now turn their attention to today’s Eurozone CPI release, which could provide further direction for the currency. Meanwhile, the Australian dollar also gained ground after China’s PMI reading beat expectations. Traders will be closely watching tomorrow’s RBA meeting minutes, which could influence the Aussie’s trajectory.
The cryptocurrency market saw a sharp rebound, with Bitcoin and Ethereum surging around 10% following a social media announcement from President Trump. He revealed plans to include five digital assets, including BTC and ETH, in a new national reserve—boosting sentiment in the sector after recent selling pressure.
Current rate hike bets on 19th March Fed interest rate decision:
Source: CME Fedwatch Tool
0 bps (95%) VS -25 bps (5%)
Market Movements
The Dollar Index remained flat as investors awaited further updates on the ceasefire talks and absorbed the latest U.S. economic data. The Core PCE Price Index, the Federal Reserve’s preferred inflation gauge, came in at 2.6%, in line with expectations, offering little surprise to the market. However, the Chicago PMI provided some support for the dollar, surging from 39.5 to 45.5, well above the expected 40.5.
The Dollar Index is trading flat while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 56, suggesting the index might edge lower since the RSI retreated sharply from overbought territory.
Resistance level: 107.60, 108.40
Support level: 106.55, 105.65
Uncertainties surrounding the Russia-Ukraine ceasefire talks have prompted investors to shift toward safe-haven assets, keeping gold resilient and driving a sharp rebound. However, as negotiations continue, any positive breakthroughs could trigger profit-taking in gold, leading to short-term volatility. Investors remain cautious, maintaining a wait-and-see approach until more concrete developments emerge.
Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 54, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline.
Resistance level: 2880.00, 2910.00
Support level: 2840.00, 2795.00
The EUR/USD pair broke to a new low in the last session after breaching its uptrend support level, signalling a bearish bias. Market attention is now on developments surrounding the Russia-Ukraine conflict, particularly after the recent meeting between the U.S. and Ukrainian Presidents at the White House. European leaders reaffirmed their strong support for Ukraine, which provided some early-week strength to the euro. Additionally, today’s Eurozone CPI release will be a key event for traders, as it could influence expectations on the ECB’s monetary policy trajectory and drive price action for the pair.
The pair remained within its bearish trajectory after breaking a new low, suggesting a bearish bias. The RSI and the MACD both remain at the bottom levels, suggesting that the pair remains trading with solid bearish momentum.
Resistance level: 1.0446, 1.0515
Support level: 1.0388, 1.0332
The USD/JPY pair appears to be forming a bullish trend reversal pattern, indicating a potential shift in momentum. This movement is largely driven by renewed U.S. dollar strength, fueled by the Trump administration’s recent tariff policies. Meanwhile, the Japanese yen has eased slightly in the latest session after posting strong gains over the past few weeks. Traders will be closely watching today’s Japan Unemployment Rate release, which could influence market expectations regarding the Bank of Japan’s March interest rate decision.
The USD/JPY has been consolidating after a bearish trend. A recent break above the price consolidation range suggests a potential trend reversal for the pair. The RSI has been moving upward, while the MACD has broken above the zero line, suggesting that the bearish momentum has vanished.
Resistance level:151.35, 154.00
Support level: 149.50, 147.00
China’s equity market rally, driven by AI breakthroughs and Xi Jinping’s support for private businesses, faces headwinds from Trump’s new 10% tariff. Ahead of the National People’s Congress, policymakers are expected to target 5% GDP growth and implement aggressive stimulus. While trade tensions persist, government intervention could support a Hang Seng Index rebound.
HK50 is trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 46, suggesting the index might extend its gains since the RSI rebounded sharply from oversold territory.
Resistance level: 23925.00, 24915.00
Support level: 22890.00, 21810.00
The Canadian dollar has been under heavy pressure, with USD/CAD trading in a strong bullish momentum. The weakness in the loonie comes as markets react to Trump’s tariff plan, which includes a proposed 25% levy on Canadian imports—a move that could severely impact Canada’s economy and weight further on its currency. With the tariff set to take effect on March 4th, USD/CAD may continue its upward trajectory, especially if risk-off sentiment persists.
The USD/CAD pair has been trading in an uptrend since finding support at the near 1.4200 mark. The RSI has gotten into the overbought zone, while the MACD has been moving upward and surpassed the zero line, suggesting that the pair is trading with strong bullish momentum.
Resistance level: 1.4550, 1.4660
Support level: 1.4340, 1.4240
Oil prices have once again tested resistance near the $70.30 mark, with a breakout above this level potentially signaling a solid bullish move. The latest Chinese PMI reading, which exceeded market expectations and remained above the 50 threshold, suggests economic expansion, boosting optimism for oil demand. Meanwhile, geopolitical risks remain in focus as tensions between Ukraine and Russia escalate, with both sides reportedly targeting crude refineries. Any further disruptions to supply could add upside pressure to oil prices, keeping volatility elevated in the near term.
Oil prices have broken above the downtrend resistance level. If oil prices are able to find support at above such a level, it could be a bullish trend reversal signal for oil. The RSI has jumped from the oversold zone, while the MACD has a golden cross at the bottom, suggesting that the bearish momentum is easing.
Resistance level:72.70, 75.00
Support level: 67.80, 65.60
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3 March 2025, 06:01 US Equity Surges on Trump’s Tariff Policy
28 February 2025, 05:29 Dollar Jump on Trump’s Tariff Policy
27 February 2025, 05:44 Dollar Subdue Ahead of Tomorrow PCE
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