Dollar Jump on Trump’s Tariff Policy

● President Trump announced the planned tariff on Canada and Mexico to take effect on 4th March.

● Wall Street faced massive selling down in the last session after Trump's tariff remark.

● All eyes are on today's PCE reading and its implications for the dollar.

Market Summary

Markets reacted sharply to Donald Trump‘s tariff announcement, with risk-off sentiment dominating the session. The U.S. president-elect confirmed that tariffs on Canada and Mexico will take effect on March 4, alongside an additional 10% levy on all Chinese imports. The U.S. dollar surged on the back of Trump’s protectionist stance, with the Dollar Index (DXY) gaining nearly 0.8% in the last session. Meanwhile, the Canadian dollar weakened significantly, driving USD/CAD to its recent high with a weekly gain of over 1.5%.

The prospect of escalating trade tensions weighed heavily on risk assets. Wall Street ended lower, led by a sharp 500-point drop in the Nasdaq, while the Hang Seng Index also opened more than 500 points lower as investors priced in heightened uncertainty.

The crypto market was not spared from the broader risk aversion, with Bitcoin sliding to a fresh multi-month low of $80,000, its weakest level since last November. The recent Bybit hack has further eroded confidence in the digital asset space, triggering a wave of selling pressure.

Looking ahead, all eyes are on todays U.S. PCE reading. A stronger-than-expected inflation print could further boost the dollar while intensifying pressure on risk assets, including equities and cryptocurrencies.

Current rate hike bets on 19th March Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (95%) VS -25 bps (5%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index surged sharply in the last session, breaking above its previous high and signaling a potential bullish trend reversal. The greenback gained momentum following Donald Trumps announcement on planned tariff measures, set to take effect on March 4. The administration's decision to impose a 25% tariff on Canadian and Mexican imports, along with an additional 10% levy on Chinese goods, fueled demand for the dollar as investors braced for heightened trade tensions.

The Dollar Index has broken above from the previous FVG level, signalling an end to the bearish trend. The RSI is poised to break into the overbought zone while the MACD is about to cross above the zero line, suggesting that the momentum is shifting to the bullish side.

Resistance level:108.40, 109.80

Support level: 106.50, 105.45

XAU/USD, H4

The strengthening of the U.S. dollar in the last session has pressured gold prices, keeping them near recent lows. Traders are closely watching the immediate support level at $2,875—should gold break below this level, it could signal a stronger bearish trend. However, with risk-off sentiment mounting in the broader market, gold may find support in the near term. The uncertainty surrounding trade tensions and geopolitical risks could drive safe-haven demand, potentially leading to a technical rebound for the metal.

Gold prices continue to slide in the last session, suggesting a bearish bias for gold. The RSI is edging lower while the MACD diverges after breaking below the zero line, suggesting that the bearish momentum remains strong with the gold.

Resistance level: 2920.00, 2955.00

Support level: 2834.40, 2800.00

Nasdaq，H4

The tech-heavy Nasdaq index suffered a sharp decline of over 500 points in the last session, marking its worst single-day drop of 2025. Investor sentiment deteriorated following a wave of risk aversion triggered by aggressive policy shifts from the Trump administration. The announcement of sweeping tariff measures stoked fears of escalating trade conflicts and potential economic disruptions, leading to a broad sell-off across equities.

Nasdaq is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum. However, RSI is at 22, suggesting the index might enter oversold territory.

Resistance level: 21910.00, 22560.00

Support level: 20510.00, 19360.00