Tariffs Slashed, Markets Soar. But Here’s Where the Real Opportunity Is

And just like that, the market is off. 

The S&P500, Nasdaq, Dow and the Russell have all erased the losses stemming from the US President Donald Trump's Liberation day. 

I mean, am I surprised? Yes and no. 

But today my opinion doesn’t mean a lot in the grand scheme of things. It’s more about what this fresh information means for markets and how we can take advantage of it. 

When the US President first announced these tariffs the markets went into panic mode, with investors worried about the future of world trade and how they could ever trust the United States again with all this uncertainty looming. 

If that was the narrative at the time then it makes sense for the market to sell off. The US markets took a beating, the US bonds went crazy, USD fell in one of its worst performing months in a very long time. Oil also found it hard to gain a foothold with the price falling to its lowest level since 2021. 

The biggest benefactors at the time were European stocks, Euro and markets that were not necessarily dependent upon strong international trade. EURUSD in particular had a strong run after a large stimulus was announced alongside USD weakness seeing the most traded forex pair climb from near parity to 1.1200 very quickly. The Japanese yen and Swiss Franc both strengthened significantly as underlying risk still bubbles away, with the market thinking that trade tensions between the US and China would just continue to expand in a negative direction. 

But that could now be shifting. 

It has been pretty unusual to see the same messaging coming out of the US administration and China’s. What we have seen in the past is that Trump or someone on the trade negotiations team would say very positive things to the media, buying some optimism for a few hours only for China to rebuke the previous statements. 

This time. It’s very different.  

The US and China both seem to agree that a decoupling is only a negative to all parties involved. They both are negotiating respectfully, which is something China was very vocal about leading up to negotiations. And tariffs between the two nations have been slashed significantly. 

What we know about this market over the past few months is that, right now, sentiment is king. 

The Guardian reported:

‘With the 115 percentage point deduction, Chinese duties on US goods will be lowered to 10%, while the US tax on Chinese goods will be lowered to 30%. That is because the US tariffs include a 20% rate imposed by Trump before the latest trade war, which the president said was related to China’s role in the US’s fentanyl crisis.’

This is a huge move by the Trump administration and it almost confirms that a deal between the two nations could come sooner rather than later, and the market loves it. 

As of writing this, here’s where US markets stand:

• S&P500: +2.50%

• Nasdaq: +3.30%

• Dow Jones: +2.13%

• Russel: +2.60%

• EURUSD: -1.25%

As an FX trader predominantly the forex pair listed here could be one to target going forward. 

Trump has been very vocal about the European Union and how they have been ‘nastier’ than China.

I don’t know about you, but that doesn’t sound good to me. 

The Euro could also see some pressure as reports about German growth still remain lackluster, and with the new chancellor Friedrich Merz has had a rocky start. 

Now compound that with a trade war with the US and boom! The euro could be back in the bin. 

EURUSD has now traded back below the key level of 1.1200, and is testing the daily 50 moving average. A break below the MA would signal to me more downside to potentially come. If the momentum does remain to the downside here then the price could target 1.0900 or even 1.0600 in the coming weeks and months.

Please remember this is not financial advice, go and do your own research too. It will also make you a better trader. 

Speak soon.