I outlined earlier today that there are “tentative signs of stability” amid the tariff turbulence. It’s too early to declare a full “Turnaround Tuesday”, but the moves higher in today’s Asia session have been a welcome break from the relentless selling seen since Friday.

View recent analysis:

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NZD/USD and AUD/USD are currently the strongest FX majors, while the US dollar and Japanese yen are the weakest. This has allowed AUD/JPY—a classic barometer of risk for FX traders—to drift higher alongside Wall Street futures during a low-volatility session. WTI crude oil is up 1.4%, and gold futures are back above $3,000. The China A50 is up 4.5%, recouping around half of Monday’s losses, which is quite decent considering China has vowed to “fight to the end” with Trump over tariffs.

In case you missed it, China announced a 34% tariff on US imports in response to the effective 54% levy the Trump administration placed on them. Naturally, Trump threatened a retaliatory levy in response to China’s retaliation, which China has promised to fight. So, it looks like the trade war is showing no signs of abating, and all eyes are now back on Trump to see how he responds.

EUR/USD technical analysis

Volatile or not, EUR/USD bulls have enjoyed a strong uptrend on the daily chart. A two-day retracement saw prices toy with a break beneath 1.09, and an inverted hammer on Monday found support at the 10-day EMA. I’m not yet convinced we’ve seen the low of this correction, given the bearish divergence on the daily RSI (14). But it does at least suggest that demand resides around 1.09, so perhaps a leg higher can now unfold as part of wave ‘B’ in an ABC correction.

The 1-hour chart has grabbed my attention, as price action suggests bulls are regaining control. The overlapping nature of the swings strongly suggests it is corrective (as opposed to the beginning of a downtrend), and the clean move higher from the 1.09 handle shows a change in character from the earlier corrective price action.

From here, the bias remains bullish on the 1-hour chart while prices hold above the 1.0920 to 1.0940 area (November high), with scope for a move up to 1.1020 or 1.1050.

USD/JPY technical analysis

While clearly within a downtrend on the daily chart, the rebound from 145 on USD/JPY have further to go. A bullish engulfing candle on Monday marks the third and final candle of the morning star reversal pattern, and it looks like mean reversion towards the 50-day EMA is underway.

The 1-hour chart shows two higher lows and failed attempts to break beneath 145, before a strong rise from 145 was accompanied with strong volumes. A potential bull flag is also on this timeframe, with the weekly and daily pivot points nearby for potential support.

The bias now is for a move to the 149 area. Beyond that is anyone’s guess, given the levels of volatility and likelihood of a retaliation from Trump.