U.S. To Tax China by 104%, Escalating Trade Tensions

*Trump is set to impose 104% levies on China on Wednesday, escalating trade tension.

*Global trading risk fuels safe-haven currencies like the Japanese Yen and Swiss Franc.

*Oil prices dived as U.S. sweeping tariffs may harm global economic growth.

Market Summary

Global equity markets were rattled, plunging to fresh lows as fears mounted over a looming full-scale trade war between the worlds two largest economies. The potential fallout from such tensions poses significant threats to global economic growth, prompting investors to rotate aggressively into safe-haven assets.

Gold surged, holding firmly above the $3,000 level, while the Japanese Yen and Swiss Franc appreciated across the board amid heightened demand for traditional safety plays. Interestingly, despite a notable rise in U.S. long-term Treasury yields, the U.S. dollar sold off sharply, extending losses in todays Asian session. The move suggests that investors are increasingly prioritizing capital preservation over yield, reflecting a broader shift in global market sentiment.

Meanwhile, oil prices continued to nosedive, pressured by the deteriorating demand outlook driven by escalating trade tensions. WTI crude dropped below the $60.00 mark, touching its lowest level since 2021, as concerns over slowing global growth and oversupply weighed on sentiment.

Overall, with tensions between the U.S. and China showing no signs of easing, markets are likely to remain volatile. Traders will be closely watching for any developments in the tariff standoff that could signal a pivot or further escalation.

Current rate hike bets on 7th May Fed interest rate decision: Source: CME Fedwatch Tool

0 bps (63.5%) VS -25 bps (36.5%)

Market Movements

DOLLAR_INDX, H4

The U.S. dollar came under renewed selling pressure as markets reacted to President Trump‘s latest escalation in the trade standoff with China. Following Beijing’s retaliatory tariffs in response to Washingtons initial round of levies, Trump doubled down—announcing a sweeping 104% tariff on Chinese imports, set to take effect Wednesday due to the absence of a formal response from the Chinese side. The aggressive stance has shaken investor confidence in the greenback, as market participants fear the intensifying trade conflict could severely dent U.S. economic growth and global trade flows.

The Dollar Index shifted away from the bullish trend and dived below the uptrend support level, suggesting a bearish signal for the index. The RSI is kept at below the 50 level, while the MACD failed to break above the zero line, suggesting that the index remains trading with bearish momentum.

Resistance level: 103.30, 104.70

Support level: 101.75, 100.25

USD/JPY，H4

USD/JPY erased all prior gains and is now hovering near recent lows, reinforcing a bearish bias for the pair. The renewed downside pressure comes as escalating U.S.-China trade tensions weigh heavily on the dollar, with markets increasingly shifting into risk-off mode. Amid heightened uncertainty, investors are flocking to traditional safe-haven assets, and the Japanese Yen is benefiting as capital flows into lower-risk currencies. This dynamic continues to pressure USD/JPY, which may see further downside if geopolitical risks intensify or if upcoming U.S. data fails to surprise to the upside.

The pair has reached its recent low level; a break below this level signals a strong bearish bias for the pair. The RSI is flowing in a lower-high pattern while the MACD is kept below the zero line, suggesting that the pair remains trading with strong bearish momentum.

Resistance level: 147.00, 151.23

Support level: 143.80, 140.50

XAU/USD, H4

Despite sharp declines in equity markets, gold prices have retreated, as some investors liquidated positions to raise cash amid market turmoil. However, the broader outlook for gold remains bullish over the longer term, supported by persistent global uncertainties and the rising probability of extended U.S.-China tensions. With the threat of 104% tariffs looming and no signs of de-escalation, safe-haven demand for gold is expected to strengthen in the coming months.

Gold prices are trading lower while currently testing the upward trendline. However, MACD has illustrated diminishing bearish momentum, while RSI is at 31, suggesting the commodity might experience technical correction since the RSI entered the oversold territory.

Resistance level: 3005.00, 3060.00

Support level: 2955.00, 2880.00