Trade War Sparks FX Moves, Precious Metals Rebound (04.08.2025)

Euro Firms as U.S.-China-EU Trade Rift Widens

The euro hovered near $1.10, its highest since October 2024, as the dollar weakened and trade tensions escalated. China plans to impose 34% tariffs on all U.S. goods from April 10, following Trump’s 10% tariff on all imports, including 20% on EU and 34% on Chinese goods. France urged firms to halt U.S. investments, and the EU is preparing countermeasures. Markets now price in a 90% chance of an ECB rate cut in April, with the deposit rate seen falling to 1.65% by December from 2.5%.

Key resistance is at 1.1100, followed by 1.1150 and 1.1215. Support lies at 1.0900, then 1.0850 and 1.0730.

Yen Climbs on Trade Talks, Record Surplus

The Japanese yen climbed toward 147 per dollar on Tuesday, reversing losses as trade uncertainty lifted safe-haven demand. Trump agreed to begin trade talks with Japan after speaking with PM Shigeru Ishiba and Treasury Secretary Scott Bessent to lead talks covering tariffs, currency, and subsidies. Trump denied delaying tariffs, saying they may stay indefinitely. Domestically, Japan’s current account surplus hit a record high in February, backed by strong exports and lower imports, further supporting the yen.

Key resistance is at 148.70, with further levels at 152.70 and 157.70. Support stands at 145.60, followed by 143.00 and 141.80.

Gold Jumps on Fresh Trade War Worries

Gold rose above $2,995/oz on Tuesday, rebounding from a 4-week low as trade war fears fueled haven demand. Trump threatened a 50% duty on China starting Wednesday unless it drops its 34% tariffs, while the EU proposed 25% counter-tariffs on U.S. goods. Markets await Fed minutes (Wed), CPI (Thu), and PPI (Fri) for policy clues. Despite recent losses, gold is still up over 14% YTD.

Key resistance is at $3,050, followed by $3,085 and $3,105. Support stands at $2,956, then $2,930 and $2830.

GBP Falls as Trade Tensions Fuel Recession

The British pound fell to $1.28, its lowest since March 4, as Trump’s trade policies fueled recession fears. After China imposed 34% tariffs on U.S. goods, markets raised BoE rate cut bets. Traders now price in 88 bps of cuts by December, up from 43 bps in March, with a 90% chance of a 25bps cut in May.

If GBP/USD breaks above 1.2850, resistance levels are at 1.2900 and 1.2940. Support is at 1.2715, followed by 1.2650 and 1.2600.

Silver Holds Ground as Markets Eye Fed Cuts

Silver hovered around $30 per ounce on Monday, staying volatile as markets reacted to Trump’s escalating trade war. The metal dropped 16% over three sessions as recession fears sparked a broad selloff, with traders liquidating metals to cover losses. China retaliated with tariffs after the US imposed levies on all countries, with others expected to follow. Trump’s tariffs excluded copper, gold, energy, and certain minerals. Despite the slump, silver may regain support as markets bet on more Fed rate cuts this year.

Technically first resistance level is located at 30.90. In case of its breach 31.40 and 32.50 could be monitored respectively. On the downside, the first support is at 29.00. 28.40 and 27.50 would become the next support levels if this level is passed.