Dollar Mixed as Tariff Tensions Rise and Jobs Data Buoys Fed Outlook | 4th July, 2025

Fed Focus, Trade Fears

On July 4, 2025, global markets react cautiously as U.S. President Trump announces plans to begin issuing tariff letters starting Friday, sparking fresh uncertainty over global trade. The U.S. Dollar trades mixed—supported by stronger-than-expected jobs data that reduces pressure on the Fed to cut rates, yet weighed down by renewed geopolitical tension. USD/CAD weakens toward 1.3600, testing a two-week low as oil prices rebound. The Australian Dollar slips below 0.6650 in response to robust U.S. labor figures. NZD/USD remains range-bound near 0.6050 amid unclear trade developments. USD/CNY holds steady after the PBOC sets a slightly higher reference rate, signaling caution. GBP/USD steadies near 1.3650 as sterling traders weigh tariff risks against firm UK macro conditions.

USD/CAD Forecast

Current Price and Context

USD/CAD trades just below 1.3600, marking a two-week low as the pair struggles to sustain upside momentum. Despite stronger-than-expected U.S. jobs data, broad risk sentiment and recovering oil prices are helping support the Canadian Dollar. The market remains cautious ahead of potential trade tariff escalations following President Trump’s announcement.

Key Drivers

Geopolitical Risks: Trump’s move to reintroduce tariffs adds uncertainty to global trade, but Canada remains less directly impacted for now.

US Economic Data: Strong NFP data bolsters the USD, yet USD/CAD remains pressured by soft technicals and firmer crude oil.

FOMC Outcome: Solid labor figures reduce the urgency for Fed rate cuts, offering USD support—though not enough to reverse CAD gains.

Trade Policy: The threat of new U.S. tariffs raises concern for global growth, but USD/CAD has yet to reflect panic.

Monetary Policy: Bank of Canada holds a steady outlook, but resilient oil and inflation could limit USD/CAD upside.

Technical Outlook

Trend: Bearish short-term after rejection from 1.3665.

Resistance: 1.3620, followed by 1.3665 and 1.3700.

Support: 1.3580, then 1.3550 and 1.3520.

Forecast: USD/CAD could test 1.3550 if crude strengthens and risk-on flows resume. A rebound above 1.3620 may signal consolidation.

Sentiment and Catalysts

Market Sentiment: Bearish tilt as CAD finds support from oil recovery and easing Fed expectations.

Catalysts: US ISM Services PMI, oil inventory data, Trump tariff developments, BoC comments.

AUD/USD Forecast

Current Price and Context

AUD/USD trades near 0.6630, under pressure after stronger-than-expected U.S. jobs data lifted the U.S. Dollar and cooled expectations for imminent Fed rate cuts. The Australian Dollar also faces domestic headwinds as traders digest recent softer inflation figures and lingering global trade uncertainty tied to President Trump’s tariff warnings.

Key Drivers

Geopolitical Risks: Trump’s tariff plans weigh on global sentiment, particularly affecting risk-sensitive currencies like the Aussie.

US Economic Data: Strong U.S. Nonfarm Payrolls data boosts the greenback and raises doubts about near-term Fed easing, pressuring AUD.

FOMC Outcome: With less urgency for cuts, interest rate divergence between the Fed and RBA narrows, favoring the USD.

Trade Policy: Rising trade tension risks, particularly with China, negatively affect AUD due to Australia’s economic dependence on Chinese demand.

Monetary Policy: The RBA remains dovish amid weak domestic CPI data, reinforcing downside risks for the Aussie.

Technical Outlook

Trend: Bearish short-term bias after rejection from 0.6680.

Resistance: 0.6660, followed by 0.6680 and 0.6725.

Support: 0.6610, then 0.6585 and 0.6550.

Forecast: AUD/USD may test 0.6585 if USD strength continues. A break above 0.6660 needed to relieve pressure and target 0.6725.

Sentiment and Catalysts

Market Sentiment: Bearish; AUD is weighed down by risk aversion and dovish RBA outlook.

Catalysts: US ISM Services PMI, Chinese PMI, Trump tariff updates, Australian trade balance data.

NZD/USD Forecast

Current Price and Context

NZD/USD trades near 0.6050, holding steady in a narrow range as traders await clarity on President Trump’s trade tariff announcements. While the US Dollar gains some support from strong jobs data, the Kiwi remains resilient amid cautious risk sentiment and a lack of domestic catalysts. Markets remain on alert for any escalation in U.S.-China tensions, which would significantly impact the New Zealand Dollar.

Key Drivers

Geopolitical Risks: Trade uncertainty returns as Trump announces plans to issue new tariff letters, keeping NZD/USD capped by global risk aversion.

US Economic Data: Strong U.S. payrolls data supports the dollar, though NZD remains relatively stable as investors wait for clearer trade direction.

FOMC Outcome: Hawkish hold from the Fed keeps USD supported; markets push back expectations of rate cuts, limiting NZD upside.

Trade Policy: New Zealand’s reliance on Chinese trade means heightened exposure to any U.S.-China tariff escalation.

Monetary Policy: The RBNZ remains dovish, while Fed policy tightening expectations weigh on the Kiwi’s ability to break higher.

Technical Outlook

Trend: Neutral to bearish; rangebound behavior below 0.6075.

Resistance: 0.6075, then 0.6100 and 0.6145.

Support: 0.6030, followed by 0.6000 and 0.5975.

Forecast: NZD/USD may continue consolidating unless Trump’s tariff timeline triggers a breakout. A break below 0.6030 opens the door to 0.6000.

Sentiment and Catalysts

Market Sentiment: Cautiously bearish; traders remain indecisive as tariff risk overshadows domestic drivers.

Catalysts: Trump’s tariff announcements, Chinese economic data, US ISM Services PMI, RBNZ statements.

USD/CNY Forecast

Current Price and Context

USD/CNY hovers around 7.1535 after the People’s Bank of China (PBOC) set the daily reference rate slightly higher than the previous fix of 7.1523. The adjustment reflects cautious policy calibration as Beijing monitors growing trade tensions following U.S. President Trump’s renewed tariff warnings. The Yuan remains stable but vulnerable to further depreciation if trade risks escalate.

Key Drivers

Geopolitical Risks: Renewed U.S.-China trade tension due to Trump’s proposed tariffs puts downside pressure on the Yuan and prompts a conservative PBOC fix.

US Economic Data: Strong U.S. jobs data supports USD strength, reinforcing the pair’s resilience above 7.15.

FOMC Outcome: Hawkish Fed outlook keeps USD bid, but PBOC is likely to defend 7.15–7.20 zone to prevent excessive Yuan weakness.

Trade Policy: Trump’s tariff announcement expected Friday increases uncertainty; China’s response will be crucial in guiding CNY flows.

Monetary Policy: PBOC maintains accommodative stance while keeping Yuan stability in focus amid capital outflow concerns.

Technical Outlook

Trend: Mildly bullish bias as USD/CNY holds above recent support.

Resistance: 7.1600, followed by 7.1730 and 7.1900.

Support: 7.1400, then 7.1250 and 7.1100.

Forecast: USD/CNY could retest 7.1600 if Trump’s tariff threat escalates. A break below 7.1400 may signal PBOC’s active support for Yuan strength.

Sentiment and Catalysts

Market Sentiment: Cautiously bullish on USD/CNY; traders monitor PBOC signals and Washington’s next steps.

Catalysts: Trump tariff letters, PBOC monetary policy guidance, Chinese inflation and trade data, global risk sentiment.

GBP/USD Forecast

Current Price and Context

GBP/USD holds steady near 1.3650 as markets weigh strong U.S. labor data against rising trade uncertainty following President Trump’s announcement of new tariff letters. While the dollar gains modest support, the British Pound remains resilient amid risk-sensitive flows and relatively stable UK fundamentals.

Key Drivers

Geopolitical Risks: Uncertainty surrounding Trump’s trade plans triggers cautious positioning in risk assets, limiting GBP upside.

US Economic Data: Strong U.S. Nonfarm Payrolls data lifts the dollar, but GBP/USD remains firm as risk appetite does not fully reverse.

FOMC Outcome: Hawkish Fed stance supports USD, though lack of immediate UK rate cuts keeps GBP stable in relative terms.

Trade Policy: While Brexit-related trade pressures have faded, global tariff risks remain a headwind for sterling if global growth is impacted.

Monetary Policy: BoE maintains a steady policy stance; divergence with Fed is muted, helping GBP/USD stay balanced for now.

Technical Outlook

Trend: Neutral-to-bullish; pair holds above 1.3620 despite pressure on risk assets.

Resistance: 1.3675, then 1.3730 and 1.3860.

Support: 1.3620, followed by 1.3570 and 1.3500.

Forecast: GBP/USD may trade sideways between 1.3620 and 1.3675 until clarity emerges on U.S. trade actions or fresh UK data surprises.

Sentiment and Catalysts

Market Sentiment: Mixed; traders remain cautious, balancing Fed strength against risk of global economic disruption from tariffs.

Catalysts: Trump trade letters, UK economic releases, US ISM Services PMI, risk sentiment shifts.

Wrap-up

On July 4, 2025, the U.S. Dollar trades unevenly across key markets as strong economic data clashes with rising trade policy uncertainty. Risk-sensitive currencies like the Aussie and Kiwi struggle, while USD/CAD declines on improving crude sentiment. GBP/USD stays firm above 1.3650 as traders balance Fed strength against global tariff risks. The PBOC’s Yuan fix reflects growing caution as the U.S.-China trade narrative resurfaces. Market participants now look ahead to U.S. ISM Services PMI, Chinese economic releases, and follow-through on Trump’s tariff plans for further direction.

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