Trump said he would not reach an agreement with China! Is the Fed likely to cut interest rates?

After the end of the rebound last week, the US dollar (USD) continued to be under pressure on Monday as investors kept a close eye on the latest developments surrounding U.S. tariffs. The European Statistics Office will release retail sales data for February, and the U.S. Economic Calendar will not release any data with a greater impact in the second half of Monday.

The optimistic March jobs data helped the dollar remain resilient to other currencies by the U.S. and Fed Chairman Jerome Powell’s relatively hawkish remarks. Still, the U.S. dollar index fell more than 1% this week.

The U.S. Bureau of Labor Statistics reported Friday that non-farm employment increased by 228,000 in March, significantly exceeding market expectations of 135,000. Later in the day, Fed Chairman Jerome Powell said that U.S. President Donald Trump's tariffs were higher than expected and they face higher inflation and slower growth risks. “The Fed’s obligation is to ensure that one-time raising of price levels does not become a persistent inflation problem,” he added.

Trump said over the weekend that he would not reach an agreement unless they settled their trade deficit with China. Meanwhile, U.S. aihuaforex.commerce Secretary Howard Lutnick confirmed on Sunday that tariffs will not be delayed and that the policy will last for days and weeks.

Basic foreign exchange market trends:

Euro/USD fell nearly 0.8% on Friday, but rose about 1.2% this week. In early Monday, the pair remained in a positive area around 1.1000. According to the Financial Times, the European Central Bank (ECB) policymaker YannisStournaras warned on Monday that Trump's tariffs could have a huge impact on eurozone demand. Earlier in the day, German data showed that industrial production contracted by 1.3% month-on-month in February, following a 2% increase reported in January.

The Australian dollar/USD fell sharply on Friday, down about 4% this week. The pair continued to decline during the Asian trading session, hitting its lowest level in five years below 0.5950, before rebounding to the 0.6000 area. Australian Treasury Secretary Jim Chalmers said the decline in the Australian dollar (AUD) was mainly concerned about the Chinese economy, adding that it also reflects the fact that the market now expects Australia to cut interest rates about four times this year.

The US dollar/yen closed in the upside on Friday, but fell nearly 2% this week. The pair remained under bearish pressure early this week, trading just below 145.50, down more than 1% on the day. Japanese Chief Cabinet Secretary Lin Yangzheng said on Monday that they are closely monitoring the market trend with a sense of urgency. Meanwhile, Japanese Prime Minister Shigeru Ishiba said late Sunday that Japan will continue to put pressure on the United States to lower tariffs on Japanese goods, but admitted that it is unlikely to make progress overnight.

The GBP/USD fell more than 1.5% on Friday, erasing all weekly gains. The pair rebounded slightly after opening bearish this week, with little change in trading on the day, around 1.2900 in early European trading.

Bulle market fundamentals: After hitting a record high in the middle of the week, gold staged a deep pullback, falling nearly 2.5% on Friday. Gold/USD fell sharply in early Asian trading on Monday, hitting its lowest level since mid-March $2,970 before rebounding above $3,000 in early European trading.

Analysis of major currency trends:

Euro: The intraday bias of the euro/dollar remains neutral for the consolidation below 1.1145. The downward space of the retracement should be curbed by the 38.2% retracement level of 1.0775 from 1.0176 to 1.1145 to bring about a rebound. On the plus side, above 1.1145 will resume the rebound from 1.0176 to 1.1213/74 key resistance zone.

GBP: The intraday bias of GBP/USD is still on a downward trend. The decline from the short-term top 1.3206 should extend to the 38.2% retracement level of 1.2783 from 1.2099 to 1.3206. The decisive breakthrough will aim at the 61.8% retracement level of 1.2522. On the plus side, a small resistance above 1.2961 will first make the intraday bias neutral.

Yen: The intraday bias of the US dollar/yen remains neutral for consolidation above the temporary low of 144.54. The upward space for recovery should be limited below the 151.28 resistance level. On the downside, below 144.54 will resume the decline from 158.86 and aim at the 61.8% forecast of 158.86 to 146.52, from 151.20 to 143.57. A breakout above this level will aim at the low of 139.57.

The above content is about "[Ihua Official Website]: Trump said he will not reach an agreement with China! Is the Federal Reserve a major interest rate cut?" is carefully aihuaforex.compiled and edited by the Avatrade foreign exchange editor. I hope it will be helpful to your transaction! Thanks for the support!

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