US Dollar (USD) held steady as markets await reciprocal tariff announcement on 2 Apr (4pm ET/4am SGT Thurs morning). There are reports to suggest that Trump’s team is still in the midst of finalising tariffs, with options ranging from reciprocal to tiered to universal tariffs. DXY was last at 104.16 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Nations including China and Europe seem more prepared
“Daily momentum is mild bullish while RSI fell. Not ruling out the risk of a pullback. Support at 103.10, 102.50 levels (76.4% fibo). Resistance at 104.00/10 levels (21 DMA, 61.8% fibo retracement of Oct low to Jan high), 104.60 and 105 levels (50% fibo, 200 DMA). This week, watch ADP (Wed); ISM services (Thu); payrolls (Fri). Softer data should weigh on USD. From a markets point of view, Trump’s tariff threat has been very well flagged in advance. Rates markets have reacted, pivoting to growth concerns from inflation while US equities (S&P 500, NASDAQ) have fallen over 10% at one point.”
“In FX world, AxJ FX have also largely traded on the back foot in the second half of March. It is also interesting to note that the North Asian neighbours (except Taiwan) – Japan, China and South Korea have banded together and agreed to make a joint response to US tariffs. Trump’s tariff and security threat (over aid to Ukraine) have also led to a rare unity among European countries to put together a ‘ReArm Europe’ plan. EU members are also considering deploying its anti-coercion instrument, which could lead to restrictions on trade and services, intellectual property rights, foreign direct investment, and access to public procurement”.
“This time, nations including China and Europe seem more prepared, whether it is deploying retaliatory strategies, counter-negotiation tactics or coming together. It may be premature to draw definitive conclusions about the future dynamics of trade friction and negotiations, but we cannot dismiss the possibility that the USD could weaken if the trade war between the US and the ROW results in US being worse off.”