The market has temporarily gained a breath, and Trump may further soften his position after 'slip'

Asian Market Review

On Monday, the US dollar index hovered near the 100 mark. Although it once returned above the 100 mark during the session, it failed to stand firm. As of now, the US dollar price is 99.68.

Federal Governor Waller: In the case of a significant economic slowdown, if there is a significant economic slowdown, it is inclined to cut interest rates earlier and more significantly. In the case of smaller tariffs, interest rate cuts may take place in the second half of the year. The impact of tariffs on inflation is expected to be temporary.

Federal Bostic: Inflation is still far above the target level. We need more clarity at the moment. The U.S. economy is in a state of stopping reply. Although we expect economic growth to exceed 1%, the final trend will depend on the direction of government policies. Therefore, it is not wise to adjust the policy significantly at present.

Trump considers imposing a 25% tariff exemption clause on imported cars and parts. It said it recently helped Apple CEO Cook; the US Department of avatradescn.commerce launched a 232 investigation into semiconductors, drugs, etc., and will withdraw from the tomato tariff suspension agreement reached with Mexico in 2019.

Hassett, Director of the National Economic avatradescn.commission for the United States: We have made great progress in tariff negotiations with the EU.

U.S. Treasury Secretary Bescent: There is no evidence that sovereign investors are selling U.S. assets. There is a toolbox to deal with bond market fluctuations, but it is far from being used. Fed Chairman Powell's successor will be interviewed in the fall.

The New York Fed's one-year inflation expectation rose to 3.58%, while the three-year expectation remained unchanged at 3%.

OPEC lowers expectations for global crude oil demand growth this year and next two years, global and US economic growth expectations; JPMorgan Chase lowers its Brent crude oil price forecast in 2025 from US$73 per barrel to US$66 per barrel.

Each official: The parties still have differences on reaching a ceasefire agreement in Gaza.

Summary of institutional views

avatradescn.commerzbank: The impact of tariffs is difficult to reverse, and most central banks will be in a dilemma.

In addition to the inflow of safe-haven funds, the prospect of further normalization of the Bank of Japan's monetary policy may also provide support for the yen in the near future. However, according to a statement issued by Bank of Japan Governor Kazuo Ueda, the central bank remains open to all policy options. This is because the impact of U.S. tariffs on inflation is unclear, which may both trigger inflation and deflation.

Englishavatradescn.comMegan Greene, a member of the Monetary Policy avatradescn.committee of the Central Bank of China, also explained the reasons for this uncertainty. The logic of US tariffs will not only harm the U.S.'s own economic growth, but also drag down its trading partners. This logic is relatively direct. However, the dollar exchange rate avatradescn.complicates inflation assessments.

As we analyzed earlier, U.S. tariffs should have caused the dollar to appreciate, and the dollar appreciation will in turn export inflation to trading partners through exchange rate channels. But now the US dollar has weakened, and the impact through exchange rate channels has become deflationary. If this situation continues, most central banks will avoid falling into the dilemma of weighing economic risks with inflation risks. Implementing a looser monetary policy will be easier to do, which in turn will ease the pressure on the appreciation of the local currency against the US dollar. At least for now, the impact of tariffs seems unlikely to reverse (without eliminating the tariff).

Oanda analyst Kelvin Wong: Euro-USD may start a rise for several months

From the chart, the euro-USD may start an upward trend that lasts for several months. The senior market analyst said that Europe and the United States experienced a strong rebound last Friday, with daily closing prices and weekly closing prices higher than the upper boundary of the long-term downward channel. In addition, the analyst said that the recent sharp rebound in Europe and the United States came after failing to fall below the 200-day moving average on March 27, indicating a major bullish breakthrough. The analyst added that the interim resistance level is set at the 1.1715-1.1755 area and the 1.1910 level.

Goldman Sachs: The US dollar still has a lot of room for downward trend

Goldman Sachs pointed out in its research report that the suspension of "peer-to-peer tariffs" by the Trump administration on April 9 prompted them to reverse the practice of raising the probability of recession in the next 12 months from 45% to 65%, but they still believe that the US economic growth in 2025 is very weak, with the fourth placeAccording to the quarterly standards, the growth rate is only 0.5%. They also lowered growth expectations in other regions, including Europe, but generally in smaller ways. The outlook for U.S. economic growth is poor, and the dollar exchange rate is still 20% higher than the long-term average, which means there is still a lot of room for the dollar to fall.

Analyst Muhammad Umair: The next wave of the dollar is still falling, and the weekly chart suggests it will be heading...

The currency market responds fiercely to the growing trade tensions. The dollar weakened as investors digested expectations of slowing growth and the Fed's potential rate cut.消费者信心下降和通货回落加剧了美元的压力。 Meanwhile, Trump's tariff shock has sparked concerns about global trade stability and hurt dollar demand. As uncertainty increases, the market expects the next wave of the dollar to fall. This weakness reflects the transfer of capital to a safer and more stable currency.

The weekly chart further confirms the bearish trend as the 100.65 support has been broken, and the US dollar is moving towards the upward channel support near 96-97.

The above content is all about "[Ihua Foreign Exchange Market Review]: The market has temporarily gained a breath, and Trump may further soften his position after 'sliding'. It is carefully avatradescn.compiled and edited by the Avatrade Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!

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