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Minneapolis Fed President Neel Kashkari highlighted the economic risks tied to shifts in the US trade balance and lingering uncertainty from ongoing trade disputes.

Speaking at an event overnight, Kashkari noted that the US's persistent trade deficit has long been supported by foreign capital inflows, which have helped keep interest rates low. However, if the U.S. were to move toward a trade surplus and lose its status as the "singular premier destination for capital", borrowing costs could rise, along with the neutral interest rate.

Kashkari emphasized that resolving current trade disputes with major partners could provide much-needed clarity for businesses and households, reducing the "extraordinary uncertainty" they currently face.

He warned that a collective loss of confidence could quickly ripple through the economy, "really bring down the economy, really slow it down" and potentially triggering job losses. While such a downturn hasn't materialized yet, Kashkari said it's a risk he is "keeping a close eye on."

Key Highlights

• USD/JPY started a recovery wave from the 140.00 zone.
• A major bearish trend line is forming with resistance at 143.40 on the 4-hour chart.
• EUR/USD corrected gains below the 1.1450 support zone.
• GBP/USD could aim for a fresh increase above the 1.3400 level.

USD/JPY Technical Analysis

The US Dollar started a decent recovery wave above 140.50 against the Japanese Yen. USD/JPY climbed above the 141.50 and 142.00 resistance levels.

Looking at the 4-hour chart, the pair surpassed the 23.6% Fib retracement level of the downward move from the 148.28 swing high to the 139.88 low. However, the bears were active below the 144.00 level.

The pair remained below the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour). There is also a major bearish trend line forming with resistance at 143.40 on the same chart.

If there is a fresh increase, the pair could face resistance near the 143.40 level and the trend line. The next major resistance is near the 144.00 level and the 50% Fib retracement level of the downward move from the 148.28 swing high to the 139.88 low.

A close above the 144.00 level could set the tone for another increase. In the stated case, the pair could even clear the 145.00 resistance.

On the downside, immediate support sits near the 141.80 level. The next key support sits near the 141.20 level. Any more losses could send the pair toward the 140.00 level, where the bulls might take a stand.

Looking at EUR/USD, the pair corrected some gains below 1.0450 but the bulls might remain active above the 1.1280 level.

Upcoming Economic Events:

• IMF Meeting.
• Michigan Consumer Sentiment Index for April 2025 – Forecast 50.8, versus 50.8 previous.

The USDCHF currency pair has been trending downward since its high on January 13, 2026. The pair follows a pattern known as a 5-wave impulse in Elliott Wave analysis. This pattern helps traders predict price movements by breaking them into distinct waves. Starting from the peak, the first wave (wave 1) saw the pair drop to 0.8965. After this decline, a brief recovery, or wave 2, pushed the price back up to 0.9196. From there, the pair resumed its downward trajectory in wave 3, which unfolded in several stages.

In wave 3, the price first fell to 0.8356, marking the end of an internal sub-wave (wave ((i))). A small bounce to 0.8583 completed wave ((ii)). The decline continued, with wave ((iii)) reaching 0.8096, followed by a slight rally to 0.8203 for wave ((iv)). The final leg of wave 3, wave ((v)), bottomed out at 0.803, wrapping up the third wave.

Currently, USDCHF is in an upward correction in wave 4, which is taking the shape of a zigzag pattern. From the low at 0.803, the pair climbed to 0.8124 in wave (i). Pair dipped to 0.8066 in wave (ii) then rose again to 0.8286 in wave (iii). A pullback to 0.8194 marked wave (iv), and the final push to 0.8311 completed wave ((a)), the first part of wave 4. Right now, the pair is experiencing a short-term pullback, called wave ((b)), correcting the rise that began on April 21, 2025. As long as the key support level at 0.8036 remains intact, USDCHF is expected to resume its upward movement soon, potentially reaching higher levels before the next major trend develops.

USDCHF 60 Minute Elliott Wave Chart

USDCHF Video

https://www.youtube.com/watch?v=O_8Fe5TikaU

• The Swiss Franc has significantly risen against the USD, driven by safe-haven demand.
• Concerns are growing about potential intervention by the Swiss National Bank (SNB) due to the Franc's impact on exports.
• The SNB has stated they prioritize price stability and haven't ruled out negative rates.
• Technical analysis suggests USD/CHF found support, but bearish signals indicate possible retests of recent lows.

The Swiss Franc has been on a tear of late against the USD and a host of other currencies. The CHFs rapid rise has come about amid the rise in uncertainty and a demand for safe havens. The beneficiaries being the traditional havens like the Japanese Yen, the Swiss Franc and of course Gold.

The Swiss Franc is an interesting one though given the reliance of Swiss business on the export market. Swiss Franc gains last year already prompted businesses to bring up the idea of intervention by the Swiss National Bank to assist.

The Franc or Swissie as it is also known, has jumped about 9% against the dollar this month, marking its biggest monthly rise since the 2008 financial crisis. Last week, it reached its highest level since January 2015, when the SNB ended its minimum exchange rate policy.

Source: LSEG

This begs the question, will the SNB step in and intervene?

Well voices on the matter are certainly growing with Jean-Philippe Kohl, vice director of industry association Swissmem saying he did not demand SNB action but would welcome any moves by the central bank to mitigate the franc's rise.

Swiss National Bank (SNB) response

The SNB stated this month that it doesn’t manipulate currency and only steps in to maintain price stability. It also mentioned the possibility of bringing back negative rates.

However, negative rates, used from 2014 to 2022, were unpopular with banks, savers, and pension funds, making interventions seem like a simpler option.

While a lot of the focus has been on the performance of the Swissie against the US Dollar, policymakers are likely focused on the Swiss currency's rise against the euro since most Swiss trade is with eurozone countries, making euro-priced imports a bigger factor in inflation.

In 2023, 57% of Swiss imports were in euros, compared to 13% in dollars. The central bank says it doesn’t focus on single currency pairs but looks at a range of currencies to guide its policy and ensure it meets its inflation target.

Irrespective of the comments thus far, the SNB may be running out of options. The rise of the Franc has put the Central Bank in a difficult situation with the likelihood of intervention growing.

Technical Analysis - USD/CHF

From a technical standpoint, USD/CHF appears to have found a bottom around the 0.8079 handle with the last two days of bullish daily candle closes a positive sign for further gains.

However, today's daily candle is on course for an inside bar handing man candle close which is a bearish sign and may spook market participants. Given that the moves are largely driven by tariff developments, a visit to recent lows cannot be ruled if the US-China stalemate drags on.

USD/CHF Daily Chart, April 24, 2025

Source: TradingView (click to enlarge)

Dropping down to a four-hour chart and the trendline break does support further upside.

A move higher faces resistance at 0.8350 and 0.8409 handles before the 200-day MA and significant swing high at 0.8577 come into focus.

There is also a chance of a trendline retest if the tit-for -tat between the US and China continues.

In such a scenario, support rests at 0.8200 before the trendline becomes support and lastly we have the psychological 0.8000 handle which could finally come into play.

USD/CHF Four-Hour Chart, April 24, 2025

Source: TradingView (click to enlarge)

Client sentiment data

Taking a look at client sentiment data and 86% of traders are currently net-long USD/CHF. I tend to take a contrarian view toward sentiment which means that USD/CHF could face a downside correction in the short-term.

The U.S. currency started the week by hitting three-year lows against a basket of key currencies, but soon closed the gap on DXY, rising from 97.7 to 99.7. However, the upward trend has not yet developed. Unresolved trade disputes between the US and China continue to undermine the US currency’s position, creating impulses for a simultaneous sell-off in USD, equities and bonds.

We saw positive traction when markets received assurances that Trump would not fire Powell. But we also continue to note the Fed’s rather hawkish rhetoric. Open Market Committee members are openly saying they will not rush to cut rates and are wary of the impact of tariffs on inflation. That said, interest rate futures give a more than 50% chance of four. That’s a marked shift from 2-3 cuts a month earlier, which underlies the current dollar weakness. It’s a worrying bet that Powell will have to pull the economy out of recession at the end of the year.

Technical analysis suggests an increased chance of a corrective bounce since the start of the year, as there is consolidation after the failure. At the same time, historical data previously showed that after the rebound, one should be ready for a new wave of decline in the US currency.

Gold: ⬆️ Buy

• Gold reversed from support area
• Likely to rise to resistance level 3500.00

Gold recently reversed up from the support area between the upper trendline of the daily up channel from January and the 38.2% Fibonacci correction of the upward impulse 3 from last month.

The upward reversal from this support area stopped the previous minor downward correction 4 which started earlier from the key resistance level 3500.00.

Given the strong daily uptrend, Gold can be expected to rise in the active impulse wave 5 toward the next resistance level 3500.00.

EURUSD: ⬆️ Buy

• EURUSD reversed from support area
• Likely to rise to resistance level 1.1510

EURUSD currency pair recently reversed up from the support area between the key support level 1.1300 (which also reversed the price at the start of April) and the 38.2% Fibonacci correction of the upward impulse from March.

The upward reversal from this support area stopped the earlier short-term ABC correction iv from the middle of April.

Given the clear multi-month uptrend, EURUSD currency pair can be expected to rise toward the next resistance level 1.1510, which stopped the earlier impulse wave iii.

DAX: ⬆️ Buy

• DAX broke resistance area
• Likely to rise to resistance level 22500.00

DAX index is under the bullish pressure after it broke the resistance area between resistance level 21500.00 (top of the previous correction A) and the 61.8% Fibonacci correction of the downward ABC wave (2) from March.

The breakout of this resistance area accelerated the active impulse wave (3) from the start of April.

Given the clear daily uptrend, DAX index can be expected to rise toward the next resistance level 22500.00 (which stopped wave B of the earlier ABC wave (2)).

• Tariffs remain at the top of investors’ agendas.
• Wall Street and gold have been very responsive to headlines.
• But which FX pair is best reflecting the turbulence?
• Aussie/franc has the strongest correlation with the S&P 500.

Markets in the mercy of Trump’s tariff rhetoric

Since Donald Trump entered the White House, market participants have been keeping their gaze locked on his remarks and policies, especially when it comes to tariffs and trade.

On April 2, the so-called “Liberation Day”, he announced tariffs on all of the US’s trading partners, and since then, he has been playing a back-and-forth game, adopting aggressive rhetoric on one day, and proceeding with delays or expressing willingness to negotiate on the other.

His chaotic strategy has been well reflected in the markets, with risk-linked assets, like equities, tumbling when the outlook becomes blinker, and rebounding when Trump is softening his stance. The opposite is true for safe havens, like gold, which amidst this turbulence hit a record high of around $3,500 on April 22.

How has the forex market been behaving?

Things are a bit more complicated in this market, as currency pairs consist of two currencies and each of them has their own drivers. The most profound reaction in the current environment is the tumbling of the US dollar but given that the world’s reserve currency has been on the back foot nearly against all its major counterparts, it is very hard to grasp sentiment swings by observing a dollar pair.

Even if someone choses the dollar against the safe-haven Swiss franc, which saw strong gains when the markets entered panic mode, the correlation of dollar/franc with the S&P 500 is not as strong as the correlation of aussie/franc with the Wall Street index.

Is aussie/franc the best tariff proxy?

But why is an FX pair that does not include the US currency so strongly correlated with the US stock market? This may have to do with the fact that in Trump’s main enemy when it comes to tariffs is China; and China is the main trading partner of Australia. So, when US-Sino tensions escalate, the aussie slides, while it gains when hopes of a deal between the world’s two largest economies arise.

What about aussie/yen?

The yen has also worn its safe-haven suit in this environment, but its responses where less aggressive compared to the Swiss franc. Perhaps investors did not show the same preference for the yen as the tariff-related turmoil and economic concerns prompted market participants to scale back their BoJ rate hike bets. From assigning an 80% chance of a 25bps hike in June, they are not seeing a 50% probability of a hike by the end of the year.

Aussie/franc has the strongest correlation with the S&P 500

Concluding, the best proxy for Trump’s tariff chaos in the FX arena is aussie/franc and the table below is confirming the argument as it has a stronger correlation with the S&P 500 than other candidates.

Despite the recovery, the outlook remains gloomy

From a technical standpoint, aussie/franc entered a recovery mode after hitting a record low of 0.5000. Although the pair is getting closer to the key resistance (prior support) area of 0.5335/60, it is still trading well below the downtrend line drawn from the high of July 11. This suggests that the bears may feel confident to jump back into the action at any time. If they do so from below 0.5335, they may initially aim for the low of April 21, the break of which could allow for declines and another test near the round number of 0.5000.

On the upside, a move back above 0.5495 would switch the outlook neutral, while the move that could signal the beginning of a bullish trend may be a break above 0.5755.