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Trade War Tensions Escalate - Moneta Markets Daily Market Update: April 14, 2025

Trade War Tensions Escalate Market Update: April 14, 2025 Global markets are gripped by volatility as the US-China trade war intensifies, with China raising tariffs on US imports to 125% in retaliation for steep US levies. Softer US inflation data and recession fears are hammering the US Dollar, boosting safe-haven gold and major currencies like the euro and pound. Cryptocurrencies show mixed signals, with Bitcoin eyeing a breakout, while Mantra’s dramatic crash rattles the market. Investors are focused on US PPI data, consumer sentiment, and trade developments for fresh direction. US-China Trade War Heats Up: China’s Finance Ministry announced an increase in tariffs on US imports from 84% to 125% starting April 12, retaliating against US tariffs on Chinese goods (145% cumulative). This escalation, following Trump’s 90-day tariff pause for most nations except China, has heightened recession fears. Market Impact: Asian equities dipped (Hang Seng -1.4%), and US futures signal a cautious open. Risk-off sentiment dominates, with focus on potential further US tariff hikes or de-escalation signals. US Dollar Under Pressure: The US Dollar Index (DXY) hovers near a 35-month low at 100.40, down 0.2%, as recession concerns and softer CPI data (2.4% YoY in March, below 2.6% expected) fuel Fed rate cut bets (100 bps by year-end). China’s tariff hike intensified USD selling. Market Impact: 10-year US Treasury yields fell to 3.85%, reflecting safe-haven bond demand. Today’s US PPI and Michigan Consumer Sentiment data are critical, though trade war news may overshadow. EUR/USD: Euro Surges Current Levels: EUR/USD trades at 1.1407, up 0.5%, hitting a multi-month high. Key Drivers: USD weakness and risk-off flows lift the euro, despite ECB rate cut expectations (25 bps likely on April 17). The 4-hour RSI above 80 signals overbought conditions, hinting at a potential pullback. Technical Outlook: Resistance at 1.1500, 1.1535, and 1.1600; support at 1.1300 and 1.1200. Trade war developments could drive volatility. GBP/USD: Pound Holds Firm Current Levels: GBP/USD rises to 1.3167, up 0.4%, holding above 1.3100. Key Drivers: Sustained USD selling supports GBP, with the pair closing above the 200-day SMA (1.2820). The 4-hour RSI near 60 reflects bullish momentum, though trade war risks linger. Technical Outlook: Resistance at 1.3200, 1.3250; support at 1.3100, 1.2820, and 1.2760. Upside bias persists unless USD rebounds. Gold: Near Record Highs Current Levels: XAU/USD trades at $3,229.27, down 0.2% but close to its $3,245 peak. Key Drivers: Safe-haven demand surges amid US-China trade tensions and USD weakness. The daily RSI at 69 suggests a shallow pullback, with tariff-driven inflation fears supporting bulls. Technical Outlook: Support at $3,200, $3,176, and $3,100; resistance at $3,245 and $3,300. US PPI data could sway momentum. Cryptocurrencies: Mixed Signals Bitcoin (BTC): Trades at $84,000, testing resistance at $85,000 (200-day EMA). A breakout could target $90,000-$95,000, but RSI near 50 shows indecision. Ethereum (ETH): Hovers at $1,600, supported above daily lows, signaling recovery potential. Ripple (XRP): Stable at $2.14, backed by its 200-day EMA. Mantra (OM): Crashed 90% to $0.83, losing $5.2 billion in market cap, raising insider trading concerns akin to Terra LUNA. Trump (TRUMP): Faces $320 million token unlock, adding supply pressure. Market Impact: Crypto markets are cautious, with BTC’s breakout potential offset by altcoin volatility. Broader Market Context Risk-Off Persists: The VIX remains elevated at 29, reflecting trade war uncertainty. European markets are mixed (FTSE 100 +0.2%, DAX -0.5%), and commodity-linked currencies struggle. Safe Havens Lead: Gold and major currencies like EUR and GBP outperform, while the USD and crypto altcoins lag. Data Watch: US PPI, Michigan Consumer Sentiment, and Fed speeches (Waller, Harker) are key, but trade war headlines could dominate. Looking Ahead: Key Events: US PPI data (expected +2.3% YoY) and Michigan Consumer Sentiment (forecast 71.0) could shape Fed rate cut bets. Trump’s response to China’s tariffs—further escalation or a step back—will drive sentiment. Market Implications: A softer PPI could deepen USD losses, boosting gold and FX pairs, while hotter data might spark a USD rebound. Crypto markets hinge on BTC’s $85,000 test and altcoin stability. Key Takeaway: The US-China trade war, now with 125% Chinese tariffs on US goods, is reshaping markets, hammering the USD and lifting safe-havens like gold and major currencies. Bitcoin teeters on a breakout, but crypto volatility persists with Mantra’s collapse. As US data looms, trade tensions hold the reins, keeping volatility front and center.

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Publication date:

2025-04-14 12:32:24 (GMT)

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