Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Stalling markets as trade talks take center stage
The US dollar continued to weaken as President Trump’s pressure on the Federal Reserve intensified, with the greenback falling across most major currencies.
The USD index slipped further, at three-year lows, as markets reacted to Trump’s ongoing demands for rate cuts, raising questions about Fed independence.
The euro was a standout performer, climbing 1% to finish above 1.1500.
The Japanese yen strengthened significantly with USD/JPY softening nearly 1% to close just below 141.00.
The Chinese yuan will be in focus with the April Politburo meeting expected later this week, which could outline policies to counter tariff impacts.
G24 Finance Ministers and Central Bank Governors meet today, with trade headlines potentially moving markets.
Fed’s Goolsbee: Potential decline in activity
On Sunday’s episode of CBS’s Face The Nation, Chicago Fed President Austan Goolsbee stated that the US economy may appear “artificially high” in the beginning “and then by the summer, might fall off, because people had bought it all and brought it forward” because to US penalties.
Goolsbee expressed his optimism that “this could be a spark to lead to a new era of global trade, which he called the golden age.”
According to him, the hard statistics for April was rather strong, with full employment, a declining inflation rate, and a stable unemployment rate.
Looking at risk sensitive currency, AUD/USD, after the previous pattern break and sharp down to the 0.5876-0.5921 support layer, the AUD/USD is now recovering towards important medium-term resistance levels in the 0.64-0.65 region.
AUD sellers may look to take advantage now as AUD is near the current 200-day EMA key resistance level of 0.6416, at the time of this writing.
China warns countries supporting the US in trade
At a news conference in Beijing, the Chinese Ministry of Commerce warned to react against countries that support US trade policy, according to Hoka News.
This highlights the growing geopolitical tensions between the two biggest economies in the world.
The delicate balance between geopolitical danger and economic opportunity will become even more critical as nations caught in the crossfire consider their options.
We opined that as the tariff war continues and the PBoC indicates a wider tolerance of a controlled CNY depreciation moving forward, the next key resistance for USD/CNY will be 7.50 to keep an eye on. Similar key level resistance of 7.50 for USD/CNH.
Short-term volatility might be introduced to the pair by developments in tariff discussions and trade negotiations as well as domestic policy stimulus.
Antipodeans scale back from top of trading range
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 21 – 25 April
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
