Market Overview
Trump’s tariff announcement has sent shockwaves across the markets, with the upcoming 25% tariffs on Canadian and Mexican goods set to take effect on March 4, 2025. The reasoning behind these tariffs stems from concerns over drug trafficking, with Trump pushing for stricter enforcement from both nations. The forex chart patterns indicate increased volatility, especially in commodity-linked currencies.
China is also in focus, with an additional 10% tariff set to be imposed, bringing the total to 20%. This move aims to pressure China into addressing trade imbalances. Worldwide economic indicators suggest that the US dollar is poised to strengthen further, while risk assets may see continued declines.
Trump’s mention of potential tariffs on the European Union, particularly targeting cars and other key industries, adds another layer of uncertainty. While no official date has been confirmed, breakout trading methods suggest that the euro could face downward pressure in the coming weeks.
Additionally, the 25% tariffs on steel and aluminum, effective March 12, 2025, now include Canada and Mexico, removing previous exemptions. This could put further pressure on North American trade, especially industries reliant on these materials.
Perhaps the most significant shift will be the reciprocal tariffs set for April 2, 2025, with the US mirroring the tariff rates imposed by other nations. This move toward protectionism could lead to further market volatility, particularly in commodity-linked currencies and manufacturing-heavy economies.
With these developments, inflation concerns are rising, reinforcing expectations that the Federal Reserve will hold off on rate cuts. The dollar’s strength is expected to persist, while gold and silver may face downward pressure due to shifting trade dynamics.
Market Analysis
Gold
GOLD prices have moved according to our expectations, dropping significantly following Trump’s renewed commitment to imposing tariffs on Mexico, Canada, and potentially Europe. The increasing likelihood of a trade war adds to inflation concerns, particularly with the Federal Reserve delaying rate cuts. The MACD shows selling volume but is approaching a crossover, suggesting a potential short-term pause. Meanwhile, the RSI is normalizing after previously reaching oversold conditions. Forex chart patterns indicate continued bearish movement as gold remains below the previous swing low and now faces resistance at the EMA200.
Silver
SILVER is experiencing increased selling momentum following the drop in gold prices. The MACD reflects higher selling volume, while the RSI confirms continued bearish sentiment. Price action has firmly shifted downward, reinforcing expectations of further declines. The announcement of tariffs has strengthened the bearish case, confirming algorithmic trading signals that suggest more downside movement.
DXY (US Dollar Index)
The US dollar gained overnight after Trump’s announcement, with investors positioning ahead of the upcoming inflation report. While the report remains significant for the Fed’s policy decisions, the tariff announcement has reduced its immediate impact. The MACD suggests continued buying strength, while the RSI shows sustained momentum. With rate cuts likely delayed, the dollar’s strength is expected to persist, making it a key driver of the forex market.
GBP/USD
The British pound has followed expectations, breaking below 1.26163 and the EMA200, confirming a shift to bearish price action. The MACD indicates growing selling momentum, while the RSI reflects strengthening downward pressure. The possibility of tariffs on European goods has further increased bearish sentiment. Breakout trading methods suggest that further declines are likely.
AUD/USD
The Australian dollar continues to weaken, maintaining its strong bearish structure. The MACD confirms increasing selling volume, while the RSI indicates that bearish momentum remains strong. With risk sentiment declining due to tariffs, the capital distribution strategy should focus on minimizing exposure to high-risk currencies like the AUD.
NZD/USD
The New Zealand dollar is showing further weakness after breaking below 0.56859, aligning with expectations for continued selling. The MACD reflects rising selling volume, while the RSI confirms sustained bearish momentum. Price action has decisively shifted downward, and there are no reversal signs at this stage.
EUR/USD
The euro has moved exactly as anticipated, breaking below the EMA200 and the lower boundary of its consolidation range. The MACD shows an increase in selling volume, while the RSI signals rising bearish strength. Price action confirms a downward trend, reinforcing expectations of continued selling pressure.
USD/JPY
The Japanese yen remains stable despite the strength in the US dollar, as markets anticipate potential rate hikes from the Bank of Japan. Prices are testing the EMA200, which is acting as resistance. The MACD remains muted, showing a lack of clear momentum in either direction, while the RSI has yet to confirm a breakout.
USD/CHF
The Swiss franc has lost gains after previously rising above the EMA200, with price action shifting back toward a bullish stance. If resistance at 0.90054 is broken, further upside momentum is expected. The MACD recently crossed lower, but this is likely temporary before the next bullish move.
USD/CAD
The Canadian dollar remains weak following Trump’s confirmation of tariffs on Canada and Mexico. The MACD and RSI both indicate strengthening bullish momentum in USD/CAD, reinforcing expectations of continued buying pressure. As trade tensions intensify, the outlook for the CAD remains bearish, while the US dollar remains strong.
COT Reports Analysis
- AUD – WEAK (3/5)
- GBP – WEAK (1/5)
- CAD – WEAK (4/5)
- EUR – WEAK (3/5)
- JPY – STRONG (5/5)
- CHF – WEAK (5/5)
- USD – STRONG (5/5)
- NZD – WEAK (5/5)
- GOLD – STRONG (4/5)
- SILVER – STRONG (5/5)
Conclusion
With ongoing tariff implementations, worldwide economic indicators point toward increased volatility in the forex market. Forex chart patterns and breakout trading methods suggest continued strength in the US dollar, while commodities such as gold and silver remain vulnerable to short-term selling pressure. Algorithmic trading signals confirm a strong market reaction, reinforcing our bearish outlook for high-risk currencies.
