Trade War Fears Weigh on Global Markets

*Global markets remain volatile ahead of Trump's reciprocal tariff announcement, fueling risk-off sentiment.

*Gold consolidates near record highs as investors seek safe-haven assets amid trade uncertainties.

*The euro and US equities struggle as fears of retaliatory tariffs weigh on sentiment.

Market Summary

Global risk appetite remained weak as investors braced for Trump's “reciprocal tariffs,” set to be unveiled at a press conference titled “Make America Wealthy Again” on Wednesday. The move has heightened fears of a widening trade war, with major economies likeCanada, and the EU preparing retaliatory actions. Volatility surged across asset classes as markets reacted to escalating tensions.

Gold hovered near record highs as investors sought safety amid economic uncertainty. While demand for safe-haven assets remained strong, traders adopted a cautious stance ahead of further tariff details. Meanwhile, the US dollar struggled for direction, tilting bearish on concerns that prolonged trade disputes could slow US economic growth.

US equities faced continued pressure despite a brief rebound from bargain hunting. Risk appetite remained subdued, with investors closely monitoring Trump's tariff announcement for potential market shifts, particularly in trade-sensitive sectors.

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

Source: CME Fedwatch Tool

0 bps (81.5%) VS -25 bps (18.5%)

Market Movements

DOLLAR_INDX, H4

The US dollar index fluctuated within a narrow range as investors struggled to find clear direction ahead of Trump‘s trade tariff announcement at 4 PM local time (20:00 GMT). Longer-term sentiment on the greenback leaned bearish as fears of trade war escalations weighed on US economic growth prospects. The White House’s confirmation of sweeping import taxes has fueled uncertainty, with major economies such asCanada, and the EU preparing potential retaliatory actions.

The Dollar Index is trading flat while currently nearby the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 43, suggesting the index might extend its gains since the RSI rebounded from oversold territory.

Resistance level: 104.70, 106.10

Support level: 103.20, 101.70

XAU/USD, H4

Gold prices surged to a record high, reflecting strong safe-haven demand amid growing uncertainty over global trade policies. Economists have warned that Trump‘s aggressive stance could trigger a severe trade war, increasing the risk of retaliatory measures from key trading partners. Investors, seeking protection from market instability, have shifted their portfolios toward gold, pushing prices higher. However, the market remains in wait-and-see mode, with traders closely monitoring Trump’s tariff announcement for further clarity on potential economic fallout.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 55, suggesting the commodity might extend its gains after breakout since the RSI stays above the midline.

Resistance level: 3135.00, 3170.00

Support level: 3110.00, 3085.00

EUR/USD , H4

The euro edged lower as the EU emerged as a key target of the new tariffs. European officials warned of strong retaliatory measures, stating that the bloc “holds a lot of cards” in its trade negotiations with the US. With Trump set to impose new import taxes during his 4 PM (20:00 GMT) press conference, concerns over escalating trade tensions continue to shape market sentiment, keeping investors on high alert for potential retaliatory measures that could further disrupt global trade flows.

EUR/USD is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 44, suggesting the pair might extend its losses since the RSI stays below the midline.

Resistance level: 1.0840, 1.0955

Support level: 1.0735, 1.0615