Tariff Tantrum: SPX, Gold, USD, EUR/USD, USD/JPY

US Dollar Price Action Setups Talking Points:

• This is a recap of today’s price action webinar looking across macro markets.
• A central theme on today’s webinar was the pointlessness of prediction, and instead, trying to use price action to find asymmetric risk-reward opportunities across markets. This is related to trying to avoid chasing moves and, instead, waiting for pullbacks like we’ve seen in equities so far this week. This is the logic of what I teach in the Trader’s Course.
• To ask questions in the live webinar you’re welcome to register and the following link will allow for that to happen: Click here for registration information.

Video

While markets remain on edge the ‘Black Monday’ that many had predicted hasn’t yet taken place. To be sure matters can change fast as we’ve seen a large push of volatility, which means the range of possible scenarios has also increased. But the fact of the matter is that no person knows exactly what will happen next, and as traders, we should keep that uncertainty front of mind at all points in time.

Interestingly U.S. Treasury yields are up today and up on net from last week, with the 10-year hitting above 4.2%. Given that this is the likely focal point of the administration, with more than $9 trillion in Treasury debt coming due later this year, there can be an attractive venue on the long side of bonds, which can act as a deterrent to equity gains. As I said in the webinar, until the 10-year gets down to around 3% or so I think this could be a factor of importance. But, with that said, it doesn’t mean that equities have to melt down in a manner similar to what showed last Thursday and Friday.

U.S. 10-Year Treasury Yields – Weekly Chart

Equities – SPX

If you are a bear on stocks, selling at this week’s open made for a difficult prospect. RSI had pushed to oversold on the weekly for the first time since 2020 and oversold on the daily for the first time since 2022, around when stocks had bottomed. Yesterday showed a rally that continued through early trade today, and now we’re seeing a bit of pressure as bears have responded by selling the pullback.

The bullish gap that I had looked at in the webinar has been filled since the above video was recorded, so the question now is whether buyers come into hold a higher-low as the 5k level remains important as a possible point of support.

Indices AD

SPX 30-Minute Chart

Gold

Gold looks like it could work a deeper pullback as the 2950-2956 support test constitutes a lower-low, and so far the re-test back-above 3k has struggled. As I said in the webinar, the door now opens for deeper retracement potential, and 2950-2956 is the spot that bulls need to defend to keep the upside trend in order. Or else the next major spot of support is the zone that held the highs in Q4 of last year, from around 2790-2800.

Gold Four-Hour Price Chart

USD

The U.S. Dollar has been somewhat messy through the entire tariff theme. Initially the currency sold off quickly on Thursday, but Friday saw an inside bar develop and yesterday saw bulls pushing a bit higher, starting to fill the gap from last Wednesday/Thursday.

At this point, there’s a short-term ascending triangle that’s still in the mix and that gap from last week runs all the way up to 103.70. There’s more resistance overhead, around 104.35 and then the 200-day moving average around 104.85; but as usual I want to try to find markets accommodative on both sides. In this webinar, I was looking to USD/JPY for USD-strength scenarios and EUR/USD for USD-weakness, expanded upon below.

U.S. Dollar (DXY) Hourly Chart

USD/JPY

In the initial aftermath of the tariff announcement USD/JPY was not looking good as sellers were hitting it consistently. But – the 145.00 level came into play on Friday morning and suddenly sellers were stalled and unable to continue the move. That 145.00 support held again at this week’s open, and led to a decent bounce yesterday until resistance came into play at 148.00.

If we do see USD-strength prevail then upside in USD/JPY could remain attractive. But, as shared in the webinar, if USD-weakness pulls this below 145.00 and causes a larger reversal, there could be legitimate fear spanning across equities as a greater show of the carry trade unwinding could drive a global de-leveraging event.

USDJPY AD

USD/JPY Weekly Price Chart

EUR/USD

For USD-weakness, I’m tracking EUR/USD following the pairs 1.1000 breakout last week. While it couldn’t hold above the big figure, there remains context for support given the prior rally off of the 200-day moving average. The 1.0943 Fibonacci level remains key, and if we do see bulls hold a higher-low on the daily chart (above Monday’s low) the door could soon open for another test of the 1.1000 handle. And if there is a backdrop of USD-breakdowns, the 1.1200 level becomes a longer-term spot of interest for the pair after it held resistance on multiple occasions there last year.

EURUSD AD

EUR/USD Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist