Dollar surges sharply alongside strong gains in US equity futures, following the official confirmation of a major breakthrough in trade talks between the US and China. Both sides have agreed to suspend most of the tariffs imposed on each other’s goods, cutting “reciprocal” duties from 125% to just 10%.
However, the US will retain a 20% tariff on Chinese imports related to fentanyl, leaving total effective tariffs on China at 30%. The move marks a significant de-escalation in trade tensions.
The agreement was reached over the weekend during negotiations in Switzerland, and both countries stated they will continue talks on economic and trade matters in the coming weeks.
USD/JPY soars through 38.2% retracement of 158.86 to 139.87 at 147.12. The development now suggests that fall from 158.86 has already completed at 139.87, just ahead of 139.57 (2024 low). Further rally should be seen to 61.8% retracement at 151.60 next.
