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Friday’s comments from President Trump about the potential introduction of 100% tariffs on trade with China pushed WTI crude oil below the $60 level for the first time in four months. The bearish sentiment stemmed from fears of a global economic slowdown amid escalating trade tensions between the world’s two largest economies.

The decline was further supported by news of peace efforts in the Middle East, which reduced the impact of geopolitical risk on oil prices.

As the XTI/USD chart shows, WTI is currently trading below $60. How might the situation unfold next?

Technical Analysis of the XTI/USD Chart

In the long-term view, oil price movements (following the flare-up in the Middle East in June) have formed a descending channel shown in red — notably, the current price has fallen below its lower boundary.

In the shorter term, we can observe an acceleration of the decline, emphasised by the purple trajectory lines.

These observations suggest that selling pressure remains dominant, while any recovery attempts are likely to meet resistance near:

→ the psychological level of $60;

→ the lower boundary of the red channel;

→ the purple median line.

Given that the White House is reportedly in favour of lower oil prices (as a means of stimulating the US economy and exerting pressure on geopolitical rivals), WTI crude could drift towards the year’s low around $55.

However, from the demand-side perspective, it cannot be ruled out that the oil market, known for its false breakouts above previous highs (A, B, C), may repeat a similar move above peak D — a pattern that, in Smart Money Concept terms, would represent a liquidity grab.

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The euro remains under pressure as escalating trade risks fuel market anxiety. A sharp sell-off was triggered by Donald Trump's announcement of a potential 100% tariff on Chinese goods, spurring a flight to safe-haven assets and boosting demand for the US dollar. This initiative is seen as a significant escalation in trade confrontation, posing a substantial threat to global exporters—particularly the eurozone economy, which is deeply integrated with China through complex supply chains and industrial exports.

Macroeconomic data from Europe continues to send mixed signals. While Germany's industrial production index shows tentative signs of stabilisation, business activity in the services sector is contracting. Given the mounting risks to external demand and signs of cooling domestic consumption, markets are increasingly pricing in the prospect of more dovish rhetoric from the European Central Bank in its upcoming communications.

Conversely, the United States maintains steady economic momentum, underscored by robust labour market data and resilient consumer spending. This strength reinforces market expectations that the Federal Reserve will keep interest rates at their current levels for longer than previously anticipated. The widening monetary policy divergence between the ECB and the Fed remains a primary anchor on the euro.

Amid the prevailing political and trade turbulence, EUR/USD is experiencing heightened volatility. Any further escalation in protectionist rhetoric from Washington or a flare-up of geopolitical tensions in Asia could precipitate a further decline in the pair towards 1.1520 and below. 

Technical Analysis: EUR/USD

H4 Chart:

Having found a support base at 1.1592, EUR/USD is currently unfolding a corrective wave towards 1.1644. We anticipate this correction concluding today, paving the way for a new declining wave targeting 1.1520. The bearish move has the potential to extend further towards 1.1500 and 1.1466. This scenario is technically confirmed by the MACD indicator, whose signal line, while below zero, is currently pointing upwards, indicating the ongoing corrective nature of the move.

H1 Chart:

The pair formed a consolidation range around 1.1592, which subsequently expanded to 1.1629. Following a retest of 1.1592 from above, the market is now correcting. We expect this upward move to reach at least 1.1639 today. It is crucial to view this entire upswing as a correction within the broader downtrend. Once this correction is complete, we anticipate the initiation of a new downward wave towards a minimum target of 1.1522. Technically, this outlook is supported by the Stochastic oscillator, with its signal line above 50 and pointing firmly upwards towards 80.

Conclusion

While the EUR/USD is experiencing a technical correction, the fundamental backdrop of trade risks and central bank policy divergence continues to favour the US dollar. The path of least resistance remains downward, with key support levels at 1.1520 and 1.1500 in focus once the current corrective bounce exhausts itself.

Market Picture

The crypto market capitalisation stood at $3.9 trillion on Monday, up 4.4% from the previous day but down 6% from pre-Friday crash levels. On Friday, the US stock market saw its biggest drop since April but recovered some of its losses on Monday. Since Sunday, the crypto market has been attempting to rebound after a sell-off that began as an emotional reaction to tariff initiatives by China and the US but escalated into massive margin calls and stop orders being triggered.

The sentiment index stood at 38 (fear) on Monday morning, down from 24 (extreme fear) the day before. The level of sentiment we saw over the weekend was last seen in April under similar circumstances — when tough trade tariffs were announced.

Bitcoin approached $115K on Monday, while Ethereum exceeded $4,200. Cryptocurrencies are recovering after Friday’s sharp decline. The movement on Friday and in the early hours of Saturday swept the ‘weak hands’ out of the market, taking the price of BTC below the 50—and 200-day moving averages and below the August and September lows.

Such sweeping liquidations often set the bottom of the market, but it may take time for the wounds to heal. In 2020, 2021 and 2024, it took a couple of weeks for the rally to start, although the market did not rewrite the lows. But in 2022, the turnaround to growth after the crash began after about six months. Relying on these statistics is encouraging for bargain hunters in crypto. Still, it would be too hasty to say that the recovery will be just as quick and will begin immediately.

News Background

Wall Street crashed on Friday after US President Donald Trump escalated the trade conflict with China following Beijing’s tightening of restrictions on trade in rare earth metals, Reuters reports.

Cryptocurrencies and stock indices fell sharply on Friday.

Some softening of tone from Trump and Xi has led to the probability of 100% tariffs against China by 1 November being estimated at 8% on Polymarket, down from 26% at the end of Friday.

Santiment notes that bitcoin remains extremely sensitive to risk appetite and behaves more like a risky asset than a safe haven.

The Kobeissi Letter notes that the collapse of cryptocurrencies on 11 October will not have long-term fundamental consequences and was caused by a combination of technical factors. The market crash triggered a record cascade of liquidations worth $19.3 billion.

Analyst Frank Fetter, citing technical indicators, said the cryptocurrency market is still far from overbought, which means there is still potential for the rally to continue.

Markets

US president Trump did on Friday what he does best: spice up a trading session. China announced tighter export controls on rare earths and other critical materials earlier in the week. Trump responded amongst others with an additional 100% tariff hike starting November 1. That would bring the effective rate to around 140%, killing off trade between the two major economies and shattering a months-long trade truce. Stock markets, lulled to sleep by the recent extremely low volatility, paid the biggest price. The tech-heavy Nasdaq lost about 3.5%. European equities responded to the news in their final trading hour by tumbling up to 1.7% (EuroStoxx50). Core bonds rallied with US Treasuries outperforming Bunds. US yields dropped between 9.1 and 11.1 bps across the curve. German rates eased 3.8-5.9 bps. The US dollar lost ground, unable to profit from the risk aversion. EUR/USD clawed back to north of 1.16, the trade-weighted index retreated to 98.98. The yen outperformed and punched USD/JPY lower to 151.2. We should add that the greenback had a strong run earlier in the week though. With the first important resistance levels either nearby (USD/JPY 153.4) or effectively under attack (EUR/USD 1.1573, DXY 99.51) conditions were ripe for a technically-inspired pullback as well, particularly going into a long weekend. The US is (partially) closed for Columbus Day today, with the exception of the stock exchanges. With Japanese market shut as well and an empty economic calendar, we’re bound to see sentiment-driven trading in a daily perspective with some distraction coming from the annual IMF/World Bank meeting kickoff. Asian markets still suffer from Trump’s latest tariff threat, despite the US administration late yesterday signalling it remains open to a deal. European (and US, for what it’s worth) equity futures seem keen to buy into it, suggesting a 0.5% open. The US dollar fluctuates north of EUR/USD 1.16. From the European side of the equation all attention is going to France once more. French president Macron reappointed Lecornu as prime minister after trading desks closed on Friday. There’s already a new cabinet, be it with the same ministers in key positions (finance, budget, foreign affairs) as in Lecornu 1.0. The former caretaking new prime minister is running extremely short on time to present a budget in time to have it approved before the end of the year. He has until today/tomorrow.In a sign of fragility, those from Les Républicains that have been appointed as minister are being ousted from the party. The far-right Rassemblement National already said they would table a vote of no confidence today, with a vote probably taking place on Wednesday. The fate of the then three-days old government will be decided by the Socialist Party. The risk of yet another collapse is very high, after which new parliamentary elections become all but unavoidable.

News & Views

Rating agency Moody’s on Friday completed a periodic review of Belgium’s credit ratings. They didn’t announce a credit rating action, with the sovereign still at Aa3 with a negative outlook. The review merely summarizes Moody’s current views on Belgium. The negative outlook reflects the risk that the government will be unable to implement measures that would stabilize the government debt burden. In the absence of a large fiscal consolidation programme, debt will continue to rise due to the material structural increase in expenditures in recent years and persistent spending pressure. Structural headwinds to fiscal consolidation and the lack of intergovernmental coordination mechanisms to achieve such effort at all level of government further hamper deficit and debt reduction. Evidence that Belgium's competitiveness is being permanently weakened by recent high wage increases and/or energy costs would also be credit negative, as well as a marked deterioration in the geopolitical risks in Europe that yields tangible evidence of weakened support from key allies, in particular the US.

Chinese export growth rose from 4.4% Y/Y in August to 8.3% Y/Y in September in USD-terms. They are now 6.1% higher YTD 2025, compared with 5.8% over the same period of last year. Export growth to non-US destinations accelerated to the fastest pace since March 2023 (+14.8% Y/Y) while shipments to the US slumped for a sixth consecutive month, dropping by -27% Y/Y. Import growth increased from1.3% Y/Y to 7.4% Y/Y with the trade balance shrinking from $102.33bn in August to $90.45bn in September.

Daily Pivots: (S1) 201.30; (P) 202.53; (R1) 203.20; More...

Intraday bias in GBP/JPY remains neutral and more consolidations could be seen. With 201.24 resistance turned support intact, further rally is still in favor. Break of 205.30 will target 61.8% projection of 184.35 to 199.96 from 197.47 at 207.11. However, firm break of 201.24 will confirm short term topping and bring deeper fall back to 197.47 support instead.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a corrective pattern which might have completed at 184.35. Firm break of 208.09 high will resume the up trend from 123.94 (2020 low). Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. However, firm break of 197.47 will dampen this view and could extend the corrective pattern with another fall.

Daily Pivots: (S1) 175.20; (P) 176.21; (R1) 176.74; More...

Intraday bias in EUR/JPY remains neutral for the moment and some consolidations could be seen. Further rise is expected as long as 175.03 resistance turned support holds. On the upside, break of 177.91 will target 61.8% projection of 161.06 to 173.87 from 172.24 at 180.15 next. However, firm break of 175.03 will confirm short term topping and bring deeper fall back to 172.24 support.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. Firm break of 172.24 support will suggests that it has turned into consolidations again. But still, outlook will continue to stay bullish as long as 55 W EMA (now at 167.16) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8681; (P) 0.8703; (R1) 0.8722; More…

Intraday bias in EUR/GBP is mildly on the upside for retesting 0.8750. Firm break there will resume larger rally towards 0.8867 fibonacci level. On the downside, break of 0.8654 will resume the fall from 0.8750 to 0.8631 support next.

In the bigger picture, rise from 0.8221 medium term bottom is seen as a corrective move. While further rally cannot be ruled out, upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Considering bearish divergence condition in D MACD, firm break of 0.8631 support will be the first sign that this corrective bounce has completed. Sustained trading below 55 W EMA (now at 0.8550) will confirm, and bring retest of 0.8221 low.

Daily Pivots: (S1) 1.7711; (P) 1.7837; (R1) 1.8071; More...

Intraday bias in EUR/AUD remains mildly on the upside for the moment. Fall from 1.8155 could have completed at 1.7569 already. Further rise should be seen to 18155 resistance. Firm break there will argue that whole corrective pattern from 1.8554 has also completed and bring retest of this high. On the downside, below 55 4H EMA (now at 1.7730) will turn bias neutral and mix up the outlook.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Deeper fall could be seen as the pattern extends, but downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Uptrend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.9272; (P) 0.9303; (R1) 0.9319; More...

Intraday bias in EUR/CHF stays mildly on the downside at this point. Fall from 0.9452 should target 0.9265 support. Firm break there should confirm that whole corrective rebound from 0.9218 has completed at 0.9452, and deeper fall should be seen to 0.9204/18 support zone. For now, risk will stay on the downside as long as 0.9330 resistance holds, in case of recovery.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. Bearishness is reaffirmed by rejection at 55 W EMA (now at 0.9405). Firm break of 0.9204 will confirm down trend resumption. On the upside, break of 0.9452 resistance is needed to be the first sign of bullish reversal, and break of 0.9660 is needed to confirm.

In focus today

Today will be light on the data front, with no immediate market movers scheduled.

This week will be light in terms of data releases as the US government shutdown most likely means that the US CPI will not be released on Wednesday and as the other major economies have no tier-1 data scheduled. During the week we will get Chinese credit growth data, which has been strong into the summer but faded somewhat in recent months. We will also look out for the final September inflation print in the euro area and German ZEW, as well as both September CPI and PPI in China. In the UK, we receive the monthly labour market report and August GDP data. In Japan, focus turns to the parliamentary vote on a new PM on Wednesday.

Economic and market news

What happened since Friday

In global trade, US President Donald Trump caught markets (and us) by surprise on Friday as he posted on Truth Social he would impose 100% tariffs on all Chinese goods on top of existing tariffs, see US-China trade - New trade escalation turns focus to Xi-Trump meeting, 13 October. In addition, he threatened to put new export controls "virtually every product they make" and on "all critical software products". The measures were a response to China announcing new export controls on rare earth minerals on Thursday last week. The tariffs would not come into effect until 1 November, though, which leaves time for talks and a possible deal with China when Trump and Chinese president Xi Jinping meet at end of this month at the sidelines of APEC Summit.

Things already seem to have calmed down over the weekend as Trump on Sunday made a new post on Truth Social saying "Don't worry about China, it will all be fine" adding that "Highly respected President Xi just had a bad moment. He doesn't want Depression for his country and neither do I". The USA wants to help China, not hurt it!!". The change in tone suggest that there has been backchannel communication between the US and Chinese side over the weekend that points to a deal being possible at the end of the month and that the tariffs will not come into effect. China's Ministry of Commerce on Sunday released a Q&A on China's recent measures highlighting that "China's export controls are not export bans". While uncertainty has increased, we see a more than 50% chance that a deal will be made between Xi and Trump before the tariffs come into effect.

In the US, the University of Michigan's flash October consumer sentiment survey showed only small changes in consumer sentiment and inflation expectations from last release. September 1-year inflation expectations fell marginally to 4.7% (prior: 4.8%), while the preliminary October 1-year inflation expectations landed at 4.6%.

US President Donald Trump will address the Israeli Knesset on Monday as a fragile Gaza ceasefire enters its fourth day, allowing for the exchange of hostages and prisoners. Trump also leads a peace summit in Egypt, though lingering tensions and unresolved governance issues in Gaza underscore the challenges ahead for lasting stability.

In France, President Emmanuel Macron reappointed Sébastien Lecornu as French prime minister on Friday, only four days after Lecornu resigned from the post. Lecornu has already appointed a government and must now present a 2026 budget today and then likely face a vote of no confidence during the week. His survival depends on at least the tacit support from the Socialists and Republicans. To get the socialist support he will likely present a watered-down version of the previous budget proposals with less strict spending cuts and a possible change to the pension reform. If the parliament fails to pass a budget an emergency bill must be passed. If Lecornu is ousted in a vote of no confidence Macron must appoint a new PM or call for a snap election, which still is a significant risk.

In China, exports surprised to the upside in September, rising by 8.3% y/y (cons: 6.0%, prior: 4.4) to a seven-month high. In the same period, imports jumped 7.4% y/y (cons: 1.5%, prior: 1.3%). China's trade surplus came in at USD 90.5bn, below expectations of 99.0bn, but higher than the 81.7bn in September the year before.

In Sweden, activity improved in August with GDP rising by 2.4% y/y and 1.1% m/m. Consumption increased as expected, while production in manufacturing and construction also improved. Overall, the data aligns well with our expectations and forecast, albeit slightly exceeding them, which is encouraging for growth in H2.

In Norway, headline inflation came in at 3.6% y/y in September (cons: 3.7%). Core inflation was 3.0% y/y (cons: 3.1%, prior: 3.1%), marking a small downside surprise. The print aligns with the ongoing disinflationary trend, supporting our view that markets may be underestimating the potential for Norges Bank easing in 2026.

Norges Bank announced an important change to their liquidity steering system Friday evening: the introduction of central bank certificates for banks and the public in order to strengthen the attainment of its liquidity policy objectives. Last week, we wrote how we think markets heavily underappreciate the risk of such a radical change to the liquidity set-up.

In Denmark, CPI inflation increased to 2.3% in September from 2.0% in August, in line with our expectations. The move higher is particularly driven by a base effect on energy as a large gasoline price decline in September 2024 exits the inflation measure. Food prices declined only 0.1% mom following the price surge over the summer, which is less than usual for September.

Equities: Risky assets sold off heavily on Friday evening as Trump threatened 'massive' tariffs on China and potentially cancelling the planned meeting with Xi. Equities finished sharply lower (S&P 500 -2.7%, Nasdaq -3.6%, Stoxx 600 -1.3%). Investors sold the most liquid stocks, meaning big tech a sharp -4% lower. This was a 'classic' risk-off session, with falling equities accompanied by falling yields. The US 10y dropped -9bp, gold prices rose (now back above USD 4k again) and oil prices -4% (below USD 60/barrel and lowest since May). Dollar was however not in a 'classic' risk-off, but weakened instead of the typical 'flight to safety' behaviour, as has been the case before in Trump-induced volatility. Rebound appears to start already, with US futures 1-2% higher this morning.

FI and FX: Bond yields rallied on Friday as Trump threatened with new tariffs on China. US Treasuries rallied some 9 to 11bp across the curve from 2Y to 30Y maturities. German yields also rallied some 4-6bp across curve. There was only a modest movement in the USD from 115.7 to 116.1 versus the euro.