Markets to watch this week

Countdown to 2 April US tariff deadline

Tariff headlines remain the overriding theme for markets as the 2 April deadline for US reciprocal tariffs stands just a little more than a week away. However, this time, there are renewed hints of optimism from the Trump administration, once again fuelling hopes that the measures may be less severe than initially feared. Officials have suggested that the list of affected countries may not be universal and that existing tariffs—such as those on steel and aluminium—may not be cumulative, potentially mitigating the overall impact on specific sectors. While the details remain uncertain, the softer tone from the US reiterates the prospects for negotiations and mutual consensus to be reached.

Looking ahead, attention will turn to a series of flash manufacturing and services Purchasing Managers' Index (PMI) releases, with broad improvements expected across major economies from the previous month. In the US, the services PMI is projected to inch up to 51.2 from 51.0, while manufacturing activity may ease to 51.9 from 52.7. While resilient data could support risk appetite, its market impact may be fleeting, as tariff developments remain the key driver of sentiment by influencing the broader growth outlook.

US Dollar Index: Eyeing for near-term double-bottom breakout

The US dollar has stabilised following its early-February sell-off, with buyers eyeing a potential breakout from a double-bottom formation on the four-hour chart. Retracements from the neckline at the 103.78 level have been short-lived so far, increasing the likelihood of an upward break, which may then target the 104.78 level next. Its four-hour relative strength index (RSI) has broken higher above its midline last week as well. Key fundamental catalysts this week to support a short-term recovery in the US dollar will revolve around any easing of US tariff headlines and resilient economic data to alleviate prevailing recession fears.

Key Levels:

• R2: 104.78

• R1: 103.78

• S1: 103.20

• S2: 102.83

US Dollar Basket chart:

Hong Kong Tech: Easing upward momentum for now

The rally in Chinese tech stocks appears to be losing steam in the near term, as the index moves to a lower-high-lower-low structure over the past week. The breakdown of an upward trendline further validates buyers’ exhaustion. While oversold technicals on the four-hour chart may allow for a slight bounce, the focus remains on whether a new lower high forms. Looking ahead, US tariff risks remain a key concern for next week, with potential for tensions to escalate before any improvement.

Key Levels:

• R2: 5,861

• R1: 5,686

• S1: 5,564

• S2: 5,370

Hong Kong Tech chart:

Spot Gold: Room for a slight cool-off?

Gold prices have recently rallied to its broad upper channel resistance around the US$3,055 level, raising the prospects of a near-term cool-off amid overbought technical conditions and declining market volatility, as indicated by the VIX. A potential bearish divergence on the daily moving average convergence/divergence (MACD) adds to the risks as well. For now, its four-hour chart shows the RSI struggling to bounce off its midline. However, given the broader upward trend, any retracement may leave key support around the US$2,945 level on watch, where an upward trendline and Ichimoku Cloud support converge.

Key Levels:

• R2: 3,100

• R1: 3,055

• S1: 3,000

• S2: 2,945

Spot Gold chart:

US Tech 100: Room for corrective bounce to extend further

The Nasdaq 100’s four-hour chart continues to display a pattern of near-term higher highs and higher lows over the past two weeks, with its four-hour RSI pushing higher above its midline as a sign of buyers in near-term control. While the risks of a broader bearish flag remain intact, current dynamics on declining market volatility, ‘extreme fear’ sentiments and improved market seasonality suggest room for the corrective bounce to extend further. One to watch if the four-hour Ichimoku Cloud resistance may be overcome ahead, which may offer further bullish confirmation.

Key Levels:

• R2: 20,300

• R1: 20,000

• S1: 19,100

• S2: 18,455

US Tech 100 chart:

USD/INR: HNS breakdown signals broader bearish bias

The breakdown of a head-and-shoulder (HNS) formation in USD/INR seems to signal a broader bearish bias, further validated by the daily RSI dipping below its midline for the first time since October 2024, overall pointing to a potential trend shift to the downside. While oversold conditions may allow for a temporary bounce, the focus remains on the formation of a new lower high as confirmation of the downward trend. Fundamentally, India’s resilient growth outlook and limited exposure to US tariffs could act as supportive factors for the INR.

Key Levels:

• R2: 87.70

• R1: 86.72

• S1: 85.83

• S2: 85.16

USD/INR chart: