π π Cautious Sentiment Prevails Ahead of U.S.-China Trade Updates and Geopolitical Risks
ποΈ Market Overview & Strategy Notes β May 7, 2025
πΈ Yen Weakens on U.S.-China Trade Hopes, but FOMC Looms Large
The Japanese yen weakened at times today following reports that U.S.-China trade talks may resume, offering the market temporary relief. However, with the FOMC decision due early on May 8 (Japan time), traders remain reluctant to commit heavily in one direction, resulting in nervous, range-bound price action.
Geopolitical risksβsuch as reports of military tensions between India and Pakistanβare also adding to market caution. USD/JPY briefly struggled to hold gains above the 144 level.
πΈ German Chancellor Vote & Political Developments in Europe
Germanyβs Bundestag failed to elect a new chancellor in the first roundβa postwar firstβthough Mr. Merz secured a majority in the second round. Expectations are rising that the new government will introduce stimulus measures to support the economy.
Meanwhile, some media reports even suggest Trump’s influence is indirectly affecting global institutions such as the Vaticanβs conclave, highlighting the unusual global reach of U.S. political dynamics.
π Key Economic Events Tonight (JST)
π«π· France: Trade Balance & Current Account (Mar)
πͺπΊ Eurozone: Retail Sales (Mar)
πΊπΈ U.S.: MBA Mortgage Applications (Apr 26βMay 2)
πΊπΈ FOMC Policy Rate Decision (3:00 AM on May 8 JST)
πΊπΈ Fed Chair Powell Press Conference (Around 3:30 AM JST)
π Rate hold is already priced in. The key focus is on whether any guidance for rate cuts is provided.
π§ Current Trading Strategy Notes
β
Maintain USD bearish bias due to U.S. economic slowdown and policy uncertainty
β οΈ Avoid new positions until after the FOMC
β± Focus on short-term range trades until a clear trend emerges
π Stay alert to U.S.-China trade headlines and geopolitical risks
π Short-Term Trade Map β May 7, 2025
π΄ USD/JPY
| Timeframe | Technical Trend | Strategy Notes |
|---|---|---|
| 5mβ15m | Bullish (short-term yen weakness) | Yen remains under pressure due to BoJ dovishness. Resistance near 144.20β144.50. Sell on rallies may be valid. |
| 1H | Range-bound | Watch 143.50β144.50 zone. Directionless ahead of FOMC. |
| Daily | Weak to neutral | Supported by post-BoJ sentiment, but upside capped by U.S. rate outlook. |
πΈ Strategy:
Sell into rallies short-term. If a breakout occurs post-FOMC, shift quickly to trend-following positions.
πΆ EUR/USD
| Timeframe | Technical Trend | Strategy Notes |
|---|---|---|
| 5mβ15m | Bullish | A stronger-than-expected Services PMI could trigger EUR buying. |
| 1H | Neutral | Box range 1.1300β1.1350. Break above 1.1350 could increase upside momentum. |
| Daily | Bearish tone | Fundamentally weaker than the U.S. outlook. Further downside remains possible. |
πΈ Strategy:
Buy on break above 1.1350, or consider fading the rally if momentum stalls.
πͺ XAU/USD (Gold)
| Timeframe | Technical Trend | Strategy Notes |
|---|---|---|
| 5mβ15m | Bullish | Rate expectations + risk aversion driving demand. Buy dips in short-term. |
| 1H | Uptrend | Testing upper range of $3270β$3300. Breakout may lead to further gains. |
| Daily | Range to firm | Potential to test $3400 if rate cut expectations intensify. |
πΈ Strategy:
Buy the dip targeting a breakout above $3300. If FOMC leans dovish, gold could accelerate higher.
