Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD prints potential reversal after Fed
The US dollar rebounded from recent lows overnight after the Federal Reserve kept interest rates on hold and indicated that the current uncertain environment means the central bank cannot provide guidance around further cuts.
Fed chair Jerome Powell highlighted the uncertainty around tariffs: “The effects on inflation could be short-lived—reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent.”
The chance of a June rate cut fell from 30% to 20% after the Powell’s statement.
The US dollar was higher across the board.
The AUD/USD fell 1.1% as it turned sharply from key resistance at the five-month highs at the 0.6500 level.
The NZD/USD also reversed from five-month highs, just above 0.6000, with a 1.1% fall.
The USD/SGD rebounded from major support at the one-year lows.
US to begin trade negotiations with China in Switzerland
Moving on to the trade story, the Chinese and US governments stated in announcements that US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer would visit Switzerland from May 9–12 for trade negotiations with China, which will be chaired by Vice Premier He Lifeng.
These will be the first official trade negotiations between China and the Trump administration.
Bessent stated on Fox News on Tuesday that de-escalation will be the topic of the conversations. China and the US share interests, and the US only wants to divorce from China in a few key areas, not in terms of trade.
The chart below shows strong correlation between EUR and CNH, with potential implications of higher USD/CNH as we’ve been calling out in our dailies.
Next key resistance levels for USD/CNH is 200-day EMA of 7.2520, and 21-day EMA of 7.2658 next.
EU mulls new counter-tariffs
Sticking with the trade story, according to sources familiar with the situation, Bloomberg said that if continuing trade discussions don’t produce a satisfying outcome, the European Union intends to apply extra tariffs on around EUR100 billion worth of US goods.
Member states will be notified of the possible retaliatory measures as early as Wednesday, and they will have a month to consult before the final list is created.
To begin the talks, the European Commission, the bloc’s executive branch that deals with trade issues, is allegedly going to present a document to the US this week.
As shown in the below chart, EUR/USD is nearing the overbought Bollinger Bands signal. The 21-day EMA of 1.1278 remains key support for EUR/USD.
In other markets, the euro was higher overnight, with AUD/EUR also turning sharply from one-month highs.
USD stages comeback
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 5 – 10 May
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
