The movements in financial markets since the beginning of this week have been quite captivating as President Donald Trump of the United States is set to implement a reciprocal policy starting April 2 local time. Under this policy, Trump will increase import tariffs on countries that raise their own tariffs on U.S. goods.
Trump has labeled this policy as “the largest” and it will “apply to all countries”. Market participants are eagerly awaiting the specifics of this policy, which could lead to heightened volatility in trading on Wednesday (April 2, 2025).
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GOLD
The price of Gold (XAUUSD) dropped by over $9, or 90 pips, trading at $3,114 per troy ounce on Tuesday, after it had reached an all-time high of $3,148 per troy ounce.
During today’s trading, Gold briefly rose to $3,135.57 per troy ounce before correcting itself. This price movement indicates that Trump’s reciprocal policy is providing a positive sentiment for Gold, which is anticipated to continue influencing trading during the European session.
OIL
Oil prices (CLS10) saw a slight decline to $71.13 per barrel on Tuesday after peaking above $72 per barrel, marking the highest level in five weeks. Oil received a boost from Trump’s intention to impose sanctions on Russia’s oil industry and conduct strikes against Iran, which raises concerns about potential disruptions to global supply.
Conversely, Trump’s reciprocal policy could lead to a slowdown in the global economy, thereby decreasing demand. This could result in further volatility in oil prices, with a likelihood of profit-taking activities.
EURUSD
EURUSD has declined for two consecutive days, closing on Tuesday at 1.07899. The risks of escalating trade tensions between the United States and the European Union contribute negative sentiment towards EURUSD. Thus, there is potential for EURUSD to continue facing pressure during the European trading session.
GBPUSD
GBPUSD recorded a slight increase to 1.29193 during Tuesday’s trading session after experiencing volatile movements. Market players are also anticipating whether Trump’s reciprocal policy will affect the UK.
Prior to Trump’s announcement regarding the reciprocal policy, GBPUSD is expected to remain volatile and may still maintain a positive sentiment. This is due to previous reports indicating that the United States and the UK are likely to reach a trade agreement, thus avoiding a full-scale trade conflict.
USDJPY
USDJPY fell in trading on Tuesday following a period of significant volatility. The sentiment surrounding the reciprocal policy has led to fluctuating movements between these two safe-haven assets. The reciprocal policy has the potential to exert downward pressure on the U.S. economic growth, resulting in a generally negative sentiment for USDJPY.
Nasdaq
The Nasdaq index has experienced two consecutive days of gains, closing Tuesday at 19,597. Early last week, it had dipped to 19,411, the lowest point since September 11 of the previous year.
This lower positioning likely activated short-covering, contributing to Nasdaq’s rise, particularly as market participants await confirmation of Trump’s reciprocal policy. However, until there is clarity on the extent of the policy, negative sentiment is expected to linger over the Nasdaq.
