Wall Street Tumbles on Trump’s Tariff Measures

• The U.S. equity market faced strong selling pressure after the market digested Trumps sweeping tariff measures.

• The dollar tumbled with the dollar index (DXY) crashing to a 6-month low.

• All eyes are on todays NFP, which could provide buoyancy for the greenback.

Market Summary

The U.S. equity market plunged sharply as investors digested the implications of President Trumps sweeping tariff measures against major U.S. trade partners. All three major indices gapped down and extended their losses throughout the session, with the Dow Jones Industrial Average tumbling over 1,600 points, or 3.98%, highlighting the intense selling pressure. This risk-off sentiment is likely to persist as markets brace for prolonged trade tensions.

At the same time, U.S. Treasury yields continued to decline, reflecting a flight to safety, which in turn dragged the dollar to its lowest level since last September. The shockwaves from Trumps aggressive trade stance reverberated across global markets, with both European and Asian equities suffering significant losses as the risk-averse mood took hold.

Amid these heightened uncertainties, safe-haven currencies like the Japanese Yen and Swiss Franc outperformed their G7 peers, drawing strength from capital rotation into defensive assets. Gold, another traditional safe haven, experienced wide swings in the last session — briefly hitting a new all-time high above $3,100 before plunging over 3% on profit-taking activity.

Looking ahead, all eyes are on the upcoming U.S. Nonfarm Payrolls (NFP) report and unemployment rate. With the dollar already under pressure from geopolitical and trade-related headwinds, a lackluster NFP print could further undermine the greenback‘s strength, reinforcing the market’s cautious stance in the face of Trumps protectionist policies.

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

Source: CME Fedwatch Tool

0 bps (67.3%) VS -25 bps (32.7%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index continued to decline, trading at its lowest level since September, as pessimistic US economic outlook and escalating trade tensions took a toll on investor sentiment. Several countries, including the EU, and Canada, began to retaliate against US policies, further diminishing the prospects of the US economy. This uncertainty also caused US Treasury yields to drop, signaling a flight to safety, which put additional pressure on the dollar. The repercussions of President Trumps aggressive trade stance have created ripples across global markets, compounding fears of a global economic slowdown.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 26, suggesting the index might extend its losses after breakout since the RSI stays below the midline.

Resistance level: 103.25, 104.55

Support level: 101.75, 100.00

XAU/USD, H4

Gold prices experienced significant volatility, dropping sharply yesterday as investors were forced to sell off positions to cover margin calls triggered by a broader market sell-off in risk assets. Despite the short-term dip, the long-term outlook for gold remains positive. The escalating trade war, combined with growing fears of a global recession, is expected to drive continued demand for safe-haven assets like gold, supporting its price in the months ahead.

Gold prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 40, suggesting the commodity might extend its losses after breakout since the RSI stays below the midline.

Resistance level: 3110.00, 3135.00

Support level: 3085.00, 3055.00

Nasdaq, H4:

US equities faced a major blow as the Nasdaq, Dow Jones, and S&P 500 each plunged more than 4% in a single session, wiping out billions in market value. This marked the worst single-day collapse for US stocks since the Covid-19 crash in 2020, triggered by Trump's aggressive tariff announcements. The global financial markets are now in turmoil as fears of a full-blown trade war intensify. Countries like Canada, the UK, and the EU have already retaliated, with Canada slapping a 25% tariff on US vehicle imports, signaling a rift in US-Canada relations. The UK has also prepared potential tariffs targeting US goods, while the EU's response is still under review.

Nasdaq is trading lower while currently testing the support level. However, MACD has illustrated increasing bearish momentum, while RSI is at 32, suggesting the index might experience technical correction since the RSI enters oversold territory.

Resistance level: 19160.00, 20345.00

Support level: 18405.00, 17385.00