Overview
The article discusses the impact of proposed tariff changes by former President Trump on the foreign exchange market, particularly the EURUSD pair and gold prices. Following the Supreme Court's rejection of a previous 10% blanket tariff, Trump has proposed a new 15% tariff, which is expected to be tested soon. This development has led to a pullback in the dollar index (DXY) and a rise in both the EURUSD and gold prices.
Market Reactions
The DXY has fallen below the 98 mark due to renewed tariff concerns, which has subsequently boosted the EURUSD above 1.18 and gold prices above 5,100. The article highlights that the proposed tariffs could revive risks associated with the dollar, energy, and risk assets, while providing support for haven assets and major currencies.
DXY Analysis
The DXY's recent pullback from the 98 resistance level has raised bearish concerns, although it continues to hold above a significant ascending trendline from 2008 to 2026. A monthly close below the 97 and 96 levels could indicate a structural shift in the market. Currently, the DXY remains in a consolidation phase below the 100 mark, maintaining a broader uptrend.
EURUSD Outlook
The EURUSD is currently trading above 1.18 but is facing resistance at the 1.1950 level. A daily or weekly close above this resistance is necessary to confirm a bullish trend towards 1.20 and potentially higher levels near 1.23 and 1.25. Conversely, if the price drops below 1.1760, it could lead to further declines towards 1.1680 and 1.1580, with the latter being a critical support level.
Gold Outlook
Gold prices are holding above the 5,100 mark, maintaining a bullish outlook. A sustained hold above 5,200 could lead to a target of 5,300, which is a key resistance level. If gold fails to maintain this level, it could face corrective drawdowns towards support levels at 4,800 and 4,400. A close below 4,400 could trigger a significant drop of 1,000 points.