Morning Note: U.S. Tariffs Shake Markets, Nikkei Sinks & Swiss Inflation Data Awaits

U.S. Tariffs Shake Markets, Drag Dollar Lower

The dollar weakened broadly after President Donald Trump announced unexpectedly aggressive tariffs on U.S. trading partners. Trump stated that a 10% baseline tariff would be imposed on all imports into the United States, with higher duties targeting some of the country's largest trading partners. Set to take effect on April 9, the tariffs are expected to impact approximately 60 countries. This escalation in trade tensions, reignited upon Trump’s return to the White House, has unsettled markets, fuelling concerns that an intensified trade war could lead to a sharp global economic downturn.

(U.S Dollar Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the overall trend of the U.S. Dollar Index has been bullish since the end of September 2024, as indicated by the formation of higher highs and higher lows. However, the index began to decline in early February 2025, marked by the formation of a significant double-top candlestick pattern. Recently, the index has broken solidly below the support zone of 103.00 – 103.20. Therefore, the bearish momentum could potentially drive the index lower.

Japan’s Nikkei Sinks as U.S. Tariffs Hit Markets

Japan's Nikkei share average tumbled to an eight-month low on Thursday following Trump's announcement of a wide-ranging set of reciprocal tariffs, including a 24% duty on Japanese goods. The Nikkei 225 plunged as much as 4.6% in early trading, reaching 34,102.00 — its lowest level since August 7. Of the 225 index components, 216 registered losses, while only nine posted gains. Meanwhile, banking stocks led the declines among the Tokyo Stock Exchange's 33 industry sectors, slumping 6.4% as falling bond yields at home and abroad dampened the outlook for lending and investment income.

(Japan 225 Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the Japan 225 index has been moving in a bearish trend since the end of January 2025, as indicated by the formation of lower highs and lower lows. Recently, strong bearish momentum has driven the index to break below the swap zone of 36,200 – 36,500, retesting it, but ultimately faced rejection due to strong selling pressure. Currently, the index has rebounded significantly after retesting the support zone of 33,100 – 33,400 with a substantial liquidity sweep. If the daily candle can close above the 35,000 level, the index could potentially surge upwards to retest the swap zone of 36,200 – 36,500.

Investors Await Swiss Inflation Data

Switzerland's year-on-year (YoY) inflation rate was 0.3% in February and is projected to decline to 0.2% in March. The month-on-month (MoM) inflation rate stood at 0.6% in February, with an expected moderation to 0.2% in March. This anticipated slowdown aligns with Switzerland’s broader disinflationary trend, driven by subdued consumer demand, stable energy prices, and the Swiss National Bank’s (SNB) prudent monetary policy. This data is set to be released on 3 April at 06:30 GMT.

(USD/CHD Daily Chart, Source: Trading View)

From a technical analysis perspective, the USD/CHF currency pair has been in a bullish trend since the beginning of October 2024, as indicated by the formation of higher highs and higher lows. However, in early February 2025, it formed a significant double-top candlestick pattern, leading to increased bearish pressure that began pushing the rate downward, as evidenced by the formation of lower highs and lower lows. Currently, it is retesting the support zone of 0.8760 – 0.8780. If it breaks below this support zone with strong bearish momentum, it could potentially continue to decline and retest the order block in the 0.8610 – 0.8630 range.

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