Nick Goold
Markets started the week strong after the U.S. delayed a planned 50% tariff hike on the EU, giving a lift to stocks and the U.S. dollar. But the mood changed by Friday when Trump accused China of breaking a trade deal, which brought back trade war worries and sent the dollar index back below 100. Gold stayed firm as investors looked for safety, and crude oil remained in a tight range without a clear trend.
In the U.S., economic data was better than expected. Durable Goods Orders and Consumer Confidence came in strong, showing that the economy is still doing well. In Japan, April inflation rose to 3.5%, slightly above forecasts. This put more pressure on households and raised concerns that interest rates may rise in the future, which led to a small drop in the Nikkei 225.
Bitcoin held above $105,000 after jumping past $110,000 the week before. Prices moved sideways as traders waited for a new reason to buy or sell. Support from Trump continued to help sentiment. Overall, it was a fairly quiet week, with markets mostly moving on trade headlines and waiting for bigger news.
Markets This Week
U.S. Stocks
U.S. equities are moving sideways as traders wait for developments in U.S.–China trade talks ahead of the 90-day deadline. Without progress, the risk of a pullback toward support at $41,500 is increasing. In the short term, selling opportunities may be the most favorable strategy. Support is seen at $41,500, $41,000, and $40,500, while resistance stands at $42,500 and $43,000.
Japanese Stocks
The Nikkei 225 appears range-bound between 36,500円 and 38,500円 as markets await clearer news on U.S.–Japan trade talks. A breakthrough on tariffs seems unlikely in the short term, which, along with a stronger yen, continues to weigh on sentiment and could push Japanese equities lower. While the index remains in a sideways pattern, negative news could lead to a short-term drop. Support is at 36,500円 and 36,000円, with resistance at 38,500円, 39,000円, and 40,000円.
USD/JPY
USD/JPY remains under pressure as continued weakness in the U.S. dollar and recent stronger-than-expected Japanese inflation data support yen strength. With no progress in U.S.–Japan trade talks and ongoing uncertainty around U.S.–China negotiations, downside risks remain. The pair is holding above key support at 142.00, and while momentum is weak, the market appears short-term oversold. Range trading is the preferred strategy for now. Resistance is seen at 144.00, 145.00, 146.00, and 148.00, while support lies at 142.00, 140.00, 139.50, and 137.00.
Gold
Gold remains in demand as the U.S. dollar stays weak and trade talks with China and Japan remain unresolved. While the overall uptrend is strong, the market has been relatively quiet, making buying on dips the best strategy in the short to medium term. Support is seen at $3,250, $3,200, and $3,150, with resistance at $3,400, $3,435, and $3,500.
Crude Oil
Crude oil is still stuck between $60 and $65, with last week’s move failing to break above $65. The recent OPEC meeting had little effect on prices, as no major production changes were announced. Until new news moves the market, trading the range between $60 and $65 is the best strategy, with a slightly better chance of an upward move. Resistance is at $65 and $67.50, while support is at $60 and $55.
Bitcoin
Bitcoin fell slightly last week on profit-taking but held firm at key support near $105,000. While the overall uptrend remains intact, short-term momentum has turned sideways to lower, making sideways movement more likely this week. Support is at $105,000, $100,000, $95,000, and $90,000, with resistance at $110,000, $112,500, and $115,000.
This Week’s Focus
Tuesday: E.U. CPI, E.U. Unemployment Rate
Wednesday: U.S. Non-Manfacturing PMI
Thursday: E.U. ECB Interest Rate Decision
Friday: U.S. Employment Data
Markets have been quiet over the past week but appear to be gearing up for a major move, as traders look for fresh catalysts. This week’s main events will be the European Central Bank’s rate decision and the U.S. employment report on Friday—both with the potential to shift market direction.
In addition to economic data, traders will closely watch any comments from the U.S. and China regarding trade negotiations. A change in tone from either side could quickly impact market sentiment. Meanwhile, the continued weakness of the U.S. dollar remains a concern, adding uncertainty and keeping investors on edge as they await clearer signals.
Tariff Tensions: What’s at Stake in the U.S.–Japan Trade Talks
The Trump administration introduced a two-tier tariff system on April 2, 2025. This included a 10% tariff on all imports and a 14% extra charge on Japanese goods, raising the total to 24%. A separate 25% tariff was added for cars and parts. Before the tariffs were due to go into effect on April 9, a 90-day freeze was announced to give both countries time to negotiate. The freeze is set to expire on July 8.
Japan didn’t retaliate with tariffs. Instead, it sent officials to Washington and supported its economy with fuel subsidies and financial aid for businesses. By May, both sides agreed to speed up the talks. Since then, Japan has taken a tougher stance, saying all tariffs must go. It also wants to keep trade talks separate from defense and currency issues.
This negotiation matters globally. The U.S. and Japan are two of the world’s biggest economies, and their trade partnership supports key global supply chains. Japan is also one of the largest holders of U.S. debt. If talks break down, Japan could sell some of these bonds, which might raise U.S. borrowing costs and hurt markets.
Current State of Negotiations
The latest round of trade talks happened on May 31 in Washington. Japan’s Economy Minister Ryosei Akazawa met with U.S. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick. Both sides said the talks were positive, but there’s still no deal.
Japan is especially concerned about the 25% auto tariff. It says there won’t be an agreement unless those tariffs are removed. Another round of talks is expected before the G7 summit in mid-June. Japan hopes Prime Minister Ishiba and President Trump can finalize a deal there.
Why It Matters for Financial Markets
This matters to traders across financial markets. In recent weeks, we've seen President Trump take a hardline approach with other countries before eventually negotiating. Many traders believe the same could happen with Japan — a show of strength followed by a last-minute deal.
Equity markets rose quickly after the initial tariff pause, reflecting optimism. Since then, markets have been quiet, waiting for a clear outcome. FX traders are cautious, and gold has started to rise again — a sign that some investors remain nervous about the risk of a trade war. If the U.S. and Japan can’t reach a deal, it could lower the chances of a deal with China too. That would increase the likelihood of a broader trade war — a scenario that could be very negative for the global economy.
Potential Outcomes
Both sides have strong reasons to reach a deal. The U.S. and Japan are long-time allies with shared interests in maintaining regional stability. With China’s influence growing in Asia and global trade realigning, a strong U.S.–Japan economic relationship is more important than ever. A successful agreement would not only help markets, but also reinforce their strategic partnership.
If talks succeed: Japanese stocks should rally, especially automakers, which are the most exposed to U.S. tariffs. A deal would reduce uncertainty, lift business confidence, and potentially lead to increased capital spending in both countries. Investors should take on more risk, and USD/JPY is likely to rise as safe-haven flows unwind. U.S. stocks are also likely to rise from the improved global trade outlook. Gold is likely to dip as risk appetite improves and traders shift into equities and other higher-yielding assets.
If talks fail: Tariffs will likely begin on July 9, hitting Japanese exporters hard and slowing economic growth. Japanese stocks are likely to fall, particularly in sectors tied to autos, steel, and electronics. The yen could strengthen further as traders seek safe-haven assets, putting more pressure on USD/JPY. The risk of a deeper correction grows more likely, with the potential for USD/JPY to fall below 140, especially since the pair has risen sharply over the past few years. Gold would likely rise as the risk of a trade war increases.
Another key risk is Japan’s large holdings of U.S. Treasury bonds. If talks collapse, Japan could reduce its purchases, which might push up U.S. interest rates. That would make it more expensive for the U.S. to borrow and hurt U.S. equities. The outcome of these negotiations could shape sentiment for the rest of the summer and impact multiple markets around the globe.
Trading Strategy
Traders should stay patient and alert. Right now, it’s hard to predict the outcome, but markets appear to be expecting a positive outcome. That means if talks fail, the reaction could be sharp — equities and USD/JPY could fall, and gold might surge as investors look for safety. Even if a deal is reached, the upside could be limited. Markets will quickly shift their focus to U.S.–China trade talks, which carry even bigger global implications.
In the short term, range trading is the best approach as volatility remains high. The Nikkei 225, USD/JPY, gold, and the S&P 500 are all attractive markets for traders watching this negotiation. Keep a close eye on the upcoming G7 meeting — the next move is likely to come from headlines, not just charts.
Countdown to the End of the Freeze
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