Markets Volatile as Global Trade Tensions Escalate (03.28.2025)

Financial markets turned cautious on Friday as global trade tensions intensified following the U.S. administration’s announcement of sweeping new tariffs on imported vehicles. 

The euro edged lower toward $1.08 despite a dovish ECB, while the yen strengthened on strong Tokyo inflation and hawkish BoJ signals. Gold surged to fresh record highs near $3,070, and silver topped $34 as investors sought safe havens amid tariff risks. Meanwhile, GBP/USD rebounded modestly as the UK pledged to push back against U.S. trade measures. Market participants now await key economic data, including U.S. Core PCE and UK GDP, for further direction.

Euro Approaches $1.08 as Trade Risks Mount

The euro edged toward $1.08, supported by dollar weakness amid rising trade tensions. The Trump administration announced a 25% tariff on all non-U.S. cars starting April 2 and warned of larger tariffs on the EU and Canada if they retaliate. The EU is expected to respond with its own tariffs next week. European Commission leadership pledged to defend EU workers and businesses while seeking dialogue. The tariffs are expected to hit Germany hardest, with a quarter of EU car exports going to the U.S.

Meanwhile, the ECB cut rates by 25 bps in March, as expected. ECB official Cipollone said the case for another cut is growing.

Key resistance is at 1.0860, followed by 1.0950 and 1.1000. Support lies at 1.0730, then 1.0660 and 1.0600.

Yen Jumps on BoJ Hawkish Tone and Tokyo CPI Surge

The yen rose to around 150.7 on Friday, rebounding from a four-week low, as strong inflation data and hawkish BoJ signals increased expectations of tighter policy.

Tokyo’s core inflation rose to 2.4% in March from 2.2% in February, beating forecasts. A BoJ summary suggested further rate hikes are possible if the outlook holds, with policymakers citing rising incomes and spending as key drivers of inflation. Markets also watched upcoming US tariffs, which may pressure Japan’s auto and other exports.

Key resistance is at 151.70, with further levels at 152.70 and 154.00. Support stands at 147.00, followed by 145.80 and 143.00.

Gold Rally Continues Ahead of US Tariffs

Gold jumped to around $3,070 on Friday, hitting a new record high as risk aversion grew ahead of next week’s US tariffs. Trump’s 25% tariffs on foreign-made cars sparked retaliation threats from the EU and Canada, raising fears of a broader trade conflict. Gold was also supported by strong central bank buying and rising ETF demand. Traders now await US PCE data for Fed policy signals, after the central bank held rates steady but reaffirmed plans for two cuts this year. Bullion is set for a fourth straight weekly gain and its biggest monthly rise since March 2024.

Key resistance is at $3,080, with further levels at $3,100 and $3,150. Support stands at $3,030, followed by $3,000 and $2,980.

GBP/USD Climbs as UK Pushes Back on Trump Tariffs

GBP/USD rose 0.5% on Thursday, reclaiming 1.2900, though the 1.3000 level remains out of reach amid ongoing pressure. UK PM Keir Starmer warned that new US tariffs could severely impact the UK economy but vowed to oppose Trump’s trade policies, calling them unbalanced. His stance mirrors that of Canada’s PM Mark Carney, as criticism of the US approach grows. Key UK data, including final Q4 GDP and February Retail Sales, is due Friday. GDP is expected to be unchanged, while retail sales may show a slight decline.

In the US, the Fed’s preferred inflation gauge, Core PCE, is also due Friday, with forecasts pointing to a rise to 2.7% YoY in February.

If GBP/USD breaks above 1.3050, resistance levels are at 1.3100 and 1.3150. Support is at 1.2860, followed by 1.2800 and 1.2715.

Silver Prices Climb Above $34 on Trade War Concerns

Silver rose above $34 on Thursday, the highest since October 2024, with weekly gains topping 2% as global trade tensions increased safe-haven demand. Trump announced 25% tariffs on all imported cars and light trucks starting April 2, along with reciprocal tariffs on countries taxing US goods, pledging to keep them in place during his second term. The move raised fears of retaliation, potential inflation, and slower US growth.

Silver also gained support from Fed rate cut expectations, with markets pricing in two 25 bps cuts in June and September, and rising odds of a third in December.

If silver breaks above $34.85, resistance levels are at $35.40 and $36.00. Support stands at $33.80, followed by $32.50 and $32.15.