💬 FX Market Outlook｜Thursday, May 30, 2025 Judicial Brake on U.S. Tariffs｜Tensions on China Policy Persist Dollar Rall
💬 FX Market Outlook｜Thursday, May 30, 2025
Judicial Brake on U.S. Tariffs｜Tensions on China Policy Persist
Dollar Rally Faces Headwinds Amid Trade Policy Uncertainty
🇺🇸 Judicial Ruling on U.S. Tariffs Sparks Risk-On Move
A new development has emerged in U.S. trade policy:
The U.S. Court of International Trade ruled that the global tariffs imposed under the Trump administration (effective April 2) were illegal, ordering the government to reverse the measures within 10 days.
This triggered a risk-on shift in the markets:
- USD/JPY briefly recovered into the 146 handle
- The Dollar Index broke above key short-term resistance (10- and 21-day moving averages)
- U.S. equities and Treasury yields both rose, with risk sentiment improving ahead of the European session.
⚠️ U.S.-China Tensions Remain a Major Overhang
Despite the court ruling, geopolitical risks and policy hawkishness persist:
- The U.S. is reportedly considering restrictions on sales of semiconductor design software to China
- Measures include suspension of certain tech exports and tighter visa rules
- Trump-aligned factions are preparing to appeal the court decision
These factors cloud the outlook for trade policy, casting doubt on whether the dollar's recovery can be sustained.
📅 Key Events Today
| Event | Details | Impact |
|---|---|---|
| 🇺🇸 U.S. Real GDP (Q1, revised) | Moderate impact | |
| 🇺🇸 Initial Jobless Claims | High impact – key short-term labor indicator | |
| 🇺🇸 Pending Home Sales (Apr) | Moderate impact | |
| 🇺🇸 7-Year Treasury Auction ($44B) | Moderate impact | |
| Other | 🇿🇦 South Africa PPI, interest rate / 🇨🇦 Canada current account / 🇧🇷 Brazil employment data | Low regional impact |
💬 Key Central Banker Speeches to Watch:
- Barkin (Richmond Fed)
- Goolsbee (Chicago Fed)
- Kugler (Federal Reserve Board)
- Bailey (Bank of England Governor)
- Daly (San Francisco Fed)
👀 Headlines to watch post-U.S. market close include potential updates from Japan’s Economic Revitalization Minister Akazawa’s U.S. visit or new developments in U.S.-Japan trade talks.
🔍 USD/JPY Short-Term Outlook
The pair is currently undergoing a technical rebound, but deeper concerns remain:
- Trade tensions
- Slowing inflation
- U.S. fiscal risks
These underlying issues continue to support a structural dollar bearish narrative.
👉 Strategy Recommendation:
- Consider selling USD/JPY on rallies toward the 145.80–146.20 zone
- 146.00–146.20 is a psychological ceiling; failure to hold above may trigger a sharp pullback
- Watch for European market reaction and post-U.S. data volatility
- Bias remains cautiously bearish / short-oriented
