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The Trump’s announcement yesterday was without a doubt worse than expected. There were some positive caveats like reciprocal tariffs not coming into effect immediately and so on, but there’s a limit to optimism and hopefulness.

Right now, the market is pricing a slowdown in global growth which is generally negative for crude oil prices as it weighs on demand. We can see in the 4 hour chart below that crude oil sold off from the key 72.00 resistance zone as Trump announced the tariffs.

We have also broken below the upward trendline that was defining the bullish momentum and now we are about to test the most recent higher low. We can expect the buyers to step in there with a defined risk below the level to position for further upside, while the sellers will look for a break lower to increase the bearish bets into the next trendline.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

That being said, they are still maintaining their forecast for China’s full year 2025 GDP growth at 4.5%. I’m not sure how their estimate works on that but okay. This was their previous baseline forecast in November last year:

This article was written by Justin Low at www.forexlive.com.

• Prior +0.8%; revised to +0.7%
• PPI +3.0% vs +3.0% y/y expected
• Prior +1.8%; revised to +1.7%

Looking at the breakdown, there were increases in prices for intermediate goods (+0.4%), energy (+0.2%), capital goods (+0.2%), and non-durable consumer goods (+0.1%). That is just marginally offset by a decline in prices for consumer goods (-0.1%).

This article was written by Justin Low at www.forexlive.com.

Rate cuts by year-end

• Fed: 82 bps (76% probability of no change at the upcoming meeting)
• ECB: 70 bps (90% probability of rate cut at the upcoming meeting)
• BoE: 60 bps (76% probability of rate cut at the upcoming meeting)
• BoC: 57 bps (71% probability of no change at the upcoming meeting)
• RBA: 83 bps (68% probability of rate cut at the upcoming meeting)
• RBNZ: 72 bps (87% probability of rate cut at the upcoming meeting)
• SNB: 16 bps (62% probability of no change at the upcoming meeting)

Rate hikes by year-end

• BoJ: 25 bps (92% probability of no change at the upcoming meeting)

We can see that the market increased the easing bets for all the major central banks on expected slowdown in the global economy. As it’s usually the case, the CHF and JPY got a boost across the board on risk-off flows despite the market scaling back rate hikes expectations for the BoJ and increasing rate cuts expectations for the SNB.

The US Dollar is the big loser here as the easing bets for the Fed get more aggressive and the markets might think that the longer they wait, the higher the probability that the rate cuts will have to be bigger to combat a potential hard landing.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The dollar is falling further in European trading as it fails to find any shelter in the first wave of the market reaction towards Trump’s tariffs. Worries about the tariffs driving the US economy to the brink of a recession are outweighing everything else, with traders clearly not liking the sort of uncertainty that Trump is bringing to the table on the domestic front.

10-year yields in the US are also marked down by 13 bps to 4.068% currently, just off lows of 4.04% earlier. Still, it is the lowest levels for yields since October last year. With the bid in bonds, that is translating to a strong decline in USD/JPY as well with the yen arguably being the safe haven of choice in all of this. The pair is now down 1.7% to 146.75 on the day, closing in on the March lows.

Elsewhere, EUR/USD is also up 1.5% to 1.1013 and GBP/USD up 1.2% to 1.3161. Meanwhile, USD/CAD has also broken to fresh lows for the year in a fall to 1.4123 and even AUD/USD is now over 100 pips higher from the lows in Asia – up 0.6% to 0.6336.

This article was written by Justin Low at www.forexlive.com.

• Europe will respond appropriately and proportionately.
• Trump’s decision on tariffs is fundamentally wrong.
• Entire world economy will suffer from this.
• Even if we did nothing in response, the tariffs will cause problems for the US economy.
• There are intricate supply chains that you can’t simply sever.
• It would be a serious economic error.

European leaders have been commenting on Trump’s reciprocal tariffs but for now it’s been all just bark and no bite.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Final Services PMI 52.5 vs 53.2 expected
• Prior 51.0
• Final Composite PMI 51.5 vs 52.0 expected
• Prior 50.5

Key findings:

• Modest expansion of service sector business activity
• New work rises for first time in three months, but
  job cuts continue
• Steep increase in input prices, driven by higher
  payroll costs

Comment:

Tim Moore, Economics Director at S&P Global Market
Intelligence, said:

“March data revealed an acceleration in UK service sector
growth to its fastest since August 2024 as a renewed
upturn in new orders helped to boost overall business
activity.

“However, the subsequent modest recovery in private
sector output has been sustained by a relatively narrow
segment of the UK economy, primarily technology and
financial services. Transportation, leisure and hospitality
firms reported weak business conditions in March,
while the manufacturing sector saw its fastest drop in
production since October 2023.

“Service providers reported a range of constraints on
growth, including stretched household budgets, risk
aversion among corporate clients and rising geopolitical
uncertainty. Service businesses also remained cautious
about the near-term outlook, with optimism still among
the lowest seen over the past two years. Worries about
increasing wages and the impact of forthcoming US tariffs
were the most cited challenges in March.

“A combination of subdued order books and elevated input
cost inflation led to cautious recruitment policies. Job cuts
have now been recorded for six months in a row, reflecting
a sustained period of hiring freezes and redundancies.

“The survey’s inflation trackers for the service economy
were again much stronger than seen in the decade prior
to the pandemic. Efforts by suppliers to pass on higher
payroll costs were widely reported as a factor leading to
increasing prices charged in March.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.

At the end of last year, they argued for the Fed to cut rates four times in 2025 before scaling that back amid Q1 developments. But now with Trump’s tariffs, they are putting their previous forecast back on the table in expecting Powell & co. to deliver between 75 bps to 100 bps of rate cuts for the remainder of the year.

From earlier, the current market pricing: Traders step up Fed rate cut pricing after Trump tariffs announcement

This article was written by Justin Low at www.forexlive.com.

As we continue to digest Trump’s tariffs, the dollar looks to be the early onset casualty as it continues to slump across the major currencies board today. But the loonie can also rejoice a bit as Trump didn’t double down on tariffs against Canada in his latest salvo. That makes just the 25% tariffs last month and the baseline 10% tariffs on all goods coming into the US. Oh, and of course the auto tariffs here.

The mix of everything is seeing USD/CAD ease lower for now, with the pair nudging closer towards a test of the February low at 1.4150.

That is a key support level to watch in the sessions ahead. A break of that could pave the way for a push back towards 1.4000 and testing the 200-day moving average (blue line). So, there are some key technical considerations to keep an eye out for.

As for the fundamental side of things, it’s still going to be a hell of a mess to sort through in the days/weeks ahead. There’s still so much uncertainty and plenty of moving parts in terms of retaliation and what not, that it will make it extremely tough for market players to draw any firm conclusions.

But for now, the dollar is the one that’s being pushed down in the first wave. And the technical considerations are starting to factor in as well, as seen above.

This article was written by Justin Low at www.forexlive.com.

• Prior 50.6
• Composite PMI 50.9 vs 50.4 prelim
• Prior 50.2

The headline continues to point to a marginal growth in the euro area services sector to wrap up Q1. The feeling is that it’s not the best but not the worst either. In other words, the euro area economy continues to stagnate in general. There will be some boost from increased spending in Germany at some point but Trump tariffs do threaten to derail the outlook going into next year. HCOB notes that:

“You can’t really call it growth anymore in the Eurozone’s service sector. Once again, the index is hovering only slightly
above the 50-point expansion threshold. New business has even seen a small drop for the second month running, and
backlogs of work are continuing their downward trend. In Germany, we’ll likely soon see some indirect boosts in the services
sector due to increased spending on infrastructure and defense. But for the Eurozone as a whole, the service sector could
face tougher times. That said, rising real wages could help stimulate private consumption, which would especially benefit
service providers.

“Inflationary pressures in the service sector eased in March after trending upwards over the past few months. Costs are still
rising at a decent clip, but not as rapidly as before. Meanwhile, service providers are holding back on price hikes more than
they have in recent months. However, there’s no all-clear for the European Central Bank (ECB) yet since inflation remains
historically high. On top of that, the ECB is pointing to increased uncertainty. So, the ongoing debate within the ECB about
whether and at what pace to further cut interest rates is pretty understandable.

“At the end of last year, it looked like the Eurozone was heading into a recession, but things have somewhat stabilized at the
start of this year. For instance, the Composite PMI was in growth territory for the third consecutive month, albeit just barely.
However, US tariffs could quickly throw the Eurozone’s economy off course again. That’s why the fiscal package planned by
the Eurozone’s largest economy, which is mainly aimed at supporting the defense and construction industries but could also
indirectly benefit the service sector, is a welcome counterweight. It significantly reduces the risk of a downturn across the
entire Eurozone.”

This article was written by Justin Low at www.forexlive.com.

• Final Services PMI 50.9 vs. 50.2 expected
• Prior 51.1 prior.
• Final Composite PMI 51.3 vs. 50.9 expected
• Prior 50.4

Key findings:

• Germany Services PMI Business Activity Index at 4-month low.
• Germany Composite PMI Output Index at 10-month high.
• Rates of input cost and output price inflation ease to five-month lows

Comment:

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“The service sector seems to be losing momentum, though it was not exactly racing ahead before. Still, the near-stagnation
that can now be observed in business activity should not be over-interpreted. Over the past couple of years, there have been
several short phases where service providers dialled things back, only to bounce back into growth mode a few months later.
The fact that hiring is still happening and confidence in future business activity has even ticked up suggests we are not
looking at a long-term slump.

“Cost increases in the service sector have slowed down quite a bit. Lower fuel prices – especially important for
transportation services – might have helped here. Plus, wages are not rising as much now that inflation has already been
accounted for in recent years. This easing of cost inflation is also showing up in selling prices, which are climbing at a slower
pace. It seems that some service providers are now more open to offering discounts, given the relatively weak demand.

“As for the debt brake reform and the special infrastructure reform, they are pretty much a non-event for the service sector,
leaving no noticeable impact in the PMI survey aside from a slight uptick in business expectations. But it is worth noting that
the lower and upper houses only voted on the constitutional changes toward the end of the survey period, and there was
some uncertainty about whether they would get the necessary support. On a broader level, many service providers probably
are not expecting a direct boost from the package, since the new funds are mainly earmarked for defence and civil
engineering.

“However, it can be safely assumed that service providers who are involved in planning processes, for example,
and who benefit from the usual multipliers – after all, the income created will be spent again – will also profit from the
additional spending. We are optimistic that the impact will start showing in the second half of the year and become more
pronounced in 2026.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 45.3
• Composite PMI 48.0 vs 47.0 prelim
• Prior 45.1

The revisions point to a modest improvement in French business activity towards the end of Q1, though still in contraction territory. That said, one must take into context the disappointing momentum in following up the Olympics boom in Q3 last year. So, there’s that. In any case, this all now pre-tariffs data and that won’t matter all too much for markets in the big picture. HCOB notes that:

“The first quarter ends on a disappointing note for French service providers. Following a brief summer high in 2024, driven
by the Olympic Games, business activity in France remained in recession territory in March 2025, according to the HCOB
PMI. Despite a slight deceleration in the rate of contraction compared to the previous month, economic uncertainty and
reduced demand continued to weigh on services activity, as reported by surveyed companies.

“Service price growth has somewhat moderated. Input prices resumed a disinflationary trajectory. Where input costs rose,
wages were cited as the primary driver. Companies will hope that price pressures continue to ease amid significantly
shrinking demand. This is because it is becoming increasingly difficult for businesses to pass costs onto customers, with the
associated price index barely in growth territory.

“The sector’s outlook is dire. Both domestic and international order intakes continue to shrink, although the contraction in
overall new orders slowed compared to the previous month. This slight improvement does little to mask the overall weak
trend. Activity expectations for the next twelve months remain well below the long-term average. Unsurprisingly, companies
are responding to the bleak outlook by downsizing their workforces.”

This article was written by Justin Low at www.forexlive.com.