Dollar Weakness and Trade Fears Shape Markets (03.05.2025)

EUR/USD surged 1.4% as the dollar weakened, while the yen fell despite hawkish BOJ remarks.

Yen Falls, Uchida's Hawkishness Ineffective

The Japanese yen fell toward 150 per dollar, pulling back from five-month highs despite hawkish signals from BOJ Deputy Governor Shinichi Uchida. He confirmed that rate hikes would continue if economic forecasts align but emphasized that monetary policy remains highly accommodative, with minimal reductions in Japanese Government Bond holdings.

Japan’s services sector saw its fastest growth in six months in February, driven by strong demand. However, the yen weakened further amid trade concerns after the U.S. imposed new tariffs on Canada, Mexico, and China, prompting retaliatory actions.

Key resistance is at 152.00, with further levels at 154.90 and 156.00. Support stands at 148.60, followed by 147.10 and 145.80.

Gold Below $2,910 on Yields Tension

Gold dipped below $2,910 per ounce, pressured by rising U.S. Treasury yields but staying near record highs due to escalating trade tensions. Trump’s 25% tariffs on Mexican and Canadian imports took effect, along with a hike in Chinese duties to 20%, triggering retaliatory measures.

Despite this, Commerce Secretary Lutnick hinted at possible tariff relief for Canada and Mexico. Gold's appeal also grew as the U.S. suspended military aid to Ukraine amid reports of potential sanctions relief for Russia. Investors now await the ISM Services PMI and U.S. jobs report for clues on Fed policy, with recent data fueling expectations of further rate cuts.

Key resistance stands at $2,923, with further levels at $2,955 and $3,000. Support is at $2,860, followed by $2,830 and $2,790.

Pound Rises on Cautious BOE Stance

The British pound climbed to $1.2795 as the Bank of England maintained a cautious approach to monetary policy. While inflation risks are not an immediate concern, strong UK wage growth continues to support inflationary pressures, suggesting that any rate cuts will be gradual. Despite a February rate cut, Q4 growth, high December wages, and strong January CPI indicate that policymakers may lean more hawkish in the coming months.

If GBP/USD breaks above 1.2835, the next resistance levels are 1.2920 and 1.2980. On the downside, support stands at 1.2760, with further levels at 1.2660 and 1.2600 if selling pressure increases.

Weaker Dollar Supports Silver's Uptrend

Silver rose 0.5% to around $32.00 on Tuesday, driven by escalating US trade tensions with Canada, Mexico, and China. Retaliatory tariffs followed the US administration’s 25% levies on Canadian and Mexican imports and a 10% duty on Chinese goods. Canada and China immediately imposed countermeasures, while Mexico signaled tariffs by Sunday, criticizing US policies for increasing economic uncertainty.

Demand for silver strengthened with rising geopolitical risks while falling US bond yields and a weaker dollar added to its momentum. The 10-year Treasury yield dropped to 4.14%, and the dollar index slipped toward 106.00.

If silver breaks above $32.50, the next resistance levels are $33.15 and $33.80. On the downside, support is at $31.00, with further levels at $30.20 and $29.75 if selling pressure increases.