Wall Street gets nervous when former President Trump talks tariffs—and lately, it’s been downright jittery. In just two weeks, Trump’s announcement about potential tariffs on Canada wiped 7% off the S&P 500 and hit the NASDAQ even harder, dragging it down by 10%. But traders might be catching on: This looks a lot like his old playbook—make threats, scare the market, then back down when he gets what he wants. Is this just another round of high-stakes bargaining? Traders seem to think so, at least for now.
When tariffs enter the conversation, traders worry about retaliation from other countries. That could mean higher costs on goods Americans buy every day. Higher prices typically lead to consumers tightening their wallets, which can slow economic growth. With trade volumes so high, a full-blown tariff war could hit the U.S. economy pretty hard.
But Trump’s latest moves suggest he’s more interested in negotiations than an actual trade war. After initially threatening tariffs, Trump quickly softened his stance. On March 5, he exempted critical sectors, removing half of Mexican imports and about 38% of Canadian goods from the tariff list. Then, just one day later, he reduced tariffs even more. Automakers, for instance, got a one-month reprieve before facing the full 25% tariff. The pattern feels familiar—strong initial threats followed by careful adjustments to keep negotiating partners off balance.
Same Game, Different Time
We’ve seen Trump use this tactic before, especially with China during his presidency. He starts negotiations by escalating tensions, waits for the market to get nervous, then backs off just enough to strike a deal that he prefers. Traders might be catching onto the pattern, causing recent panic to ease slightly. Stocks have bounced back a bit as traders realize tariffs might be a bargaining chip rather than a permanent policy.
But tariffs might be just one part of Trump’s bigger strategy. By creating market uncertainty, he could be nudging the Federal Reserve toward cutting interest rates. Trump often measures success by stock market performance. A weak stock market can put pressure on the Fed to act, and historically, interest rate cuts have helped markets bounce back strongly. In fact, after rate cuts, the S&P 500 has historically gained about 16% within a year and nearly doubled (up around 97%) within five years.
So, the current tariff talk might really be about getting the Fed to ease monetary policy. Lower interest rates mean cheaper borrowing costs, more investments, and eventually higher stock prices. Traders seem cautiously aware of this game—expecting some turbulence now, but eyeing the possibility of gains down the line.
Still, even though markets relaxed slightly after Trump’s latest pullbacks, deeper economic concerns haven’t vanished. High interest rates limit how much new money can be borrowed, which means the economy can’t easily rely on fresh debt to stimulate growth. That’s why traders should remain cautious. Trump’s tariffs and Fed reactions will continue driving volatility. Keeping an eye on both trade negotiations and central bank decisions will be key, as both will shape where the market heads next.
Market Movements This Week
The USD Index (USDX) moved lower, finding some support around 103.45. Although prices bounced slightly, we’re still watching key resistance at 104.90 and 105.60, looking for bearish signals before confirming any new direction.
EURUSD saw downward pressure after approaching the 1.0890 area, ending the week on a bearish note. We’re now eyeing potential bullish action around the 1.0695 and 1.0610 levels.
GBPUSD finished around the 1.2944 mark and faced resistance at this level. We’re waiting to see if prices dip lower toward 1.2780 or 1.2720, where bullish patterns could form.
USDJPY stabilized near 146.90, but the price action remains inconclusive. If this pair continues downward, we’ll watch closely around the 146.25 support zone. Similarly, USDCHF looks vulnerable to further declines, with a critical support area identified around 0.8780. Traders should wait for clear bullish signs near the 0.8710-0.8780 range before entering new trades.
Commodity pairs AUDUSD and NZDUSD moved higher from monitored support levels but lacked strong bullish momentum. We’re cautious here, as further confirmation is needed. Specifically, we’re eyeing bullish activity at 0.6250 for AUDUSD and around 0.5650 for NZDUSD if these pairs dip again.
USDCAD retraced lower after testing near 1.4425, just below our targeted 1.4450 resistance. If the price moves back upward, bearish patterns at 1.4450 could set up new trade entries.
In the commodity markets, USOil rallied mildly after briefly breaking below 65.508. However, the current momentum isn’t strong enough to suggest sustained buying, making the 69.85 area a critical spot for possible bearish entries.
Gold prices are currently stuck in consolidation. We’re paying close attention to the support around 2890; a strong bounce here might trigger a fresh push towards new record highs.
SP500 managed to climb slightly off its lows at 5675, but we’re cautious. The market’s next moves will reveal whether this uptick is a true recovery or merely a temporary pause before further volatility.
Bitcoin is caught in a tight range, and we’re waiting for a clear breakout before taking action. If Bitcoin dips again, the 74,000 area remains key support. Meanwhile, Natural Gas found buyers around 4.25 and could extend its recovery towards 5.00 soon. If momentum strengthens further, we’re watching for potential tests near 5.70.
Key Events This Week
This week started off quietly, but traders shouldn’t get comfortable just yet. Tuesday brings fresh data on U.S. job openings, with forecasts expecting an increase to 7.71 million from last month’s 7.60 million. This suggests some strength in the labor market, potentially boosting the dollar early this week.
On Wednesday, traders will have their eyes glued to inflation figures, with the U.S. Consumer Price Index (CPI)expected to ease slightly to 0.30%, down from the previous 0.50%. A lower CPI reading might suggest cooling inflation pressures, setting up possible selling opportunities if the USD finishes its current consolidation phase. Canada’s interest rate decision also comes Wednesday, expected to drop from 3.00% to 2.75%. Markets typically respond strongly to central bank moves, so traders should remain vigilant around this event.
Thursday will bring more U.S. economic insight with Producer Price Index (PPI) figures anticipated at 0.30%, down from 0.40% previously. Traders will likely react based on how these numbers influence the Fed’s future rate decisions.
On Friday, UK GDP numbers close out the week with a modest forecasted growth of just 0.1%, a significant slowdown from the previous 0.4%. This could weaken the Pound, prompting traders to monitor closely for potential short-term trading opportunities.
