Dollar Plummeting: Market Crisis Amid Tariff Shock

In April, U.S. President Donald Trump announced 'Liberation Day tariffs', which targeted a number of countries – 54% in China, 46% in Vietnam, and 24% in Malaysia. Far exceeded the expected scope of taxation, which instantly detonated the market panic.

Wall Street wiped $5 trillion in a week, and the dollar index fell to its lowest level since September 2024. The market is full of mourning, and investors are dumping risky assets.

In the face of the crisis, Fed Chairman Paul Vale made it clear that 'there will be no rate cuts in the short term', bluntly saying that tariffs have exacerbated inflationary pressures. This statement completely extinguished the market's expectations for a policy bailout.

Technical analysis shows that the U.S. dollar index has broken below key support and the weekly level has turned into a 'bearish trend'. If the current three-wave downward pattern continues, the medium-term target may be in the range of 90.825 to 94.490.

In the short term, the U.S. dollar index entered a sideways trend, with last week's low of 98.8 becoming a key line of defense. If it rebounds, there are two possibilities to look out for:

A mild rebound to the 101 area (50% retracement of losses) or a deep rebound to the 102.345-103.310 area. But if the rebound is blocked, the downside risk will be magnified again!

Traders need to keep an eye on the reversal signal, and if the price fails to break above 103.310, the bearish trend may restart with the target of 98.8 or even lower.

The tariff shock has not subsided, and inflation concerns have resurfaced. The market in 2025 is destined to find direction in the midst of turbulence. Whether you are an investor or a trader, you can only stand firm in the storm if you remain vigilant.

Speaker: Daniel Ang (Sophisticated Trader with 30 yrs exp)