5 Dynamic Forex Trade Ideas for Tariff Truce
Global FX markets are resetting after Monday’s euphoric rally sparked by the 90‑day US‑China tariff truce. The knee‑jerk surge in risk assets pushed the USD to a one‑month high, lifted high‑beta crosses such as AUD/JPY and CAD/JPY, and left policy‑sensitive majors (EUR, GBP) nursing losses. Heading into Tuesday’s US CPI release, the dominant narrative has shifted from “recession risk” to “policy patience”: the Federal Reserve’s hawkish pause, Bank of Japan officials flagging conditional scope to resume hikes, and the ECB openly preparing additional easing. Volatility is being repriced accordingly: dollar call‑skew has ticked higher, while safe‑haven premiums in JPY and CHF are beginning to erode.
Against that macro backdrop—and after the overnight pull‑back in the greenback as traders square ahead of the data—five currency pairs present the clearest blend of technical exhaustion and macro catalysts to justify high‑conviction, short‑duration ideas.
5 Dynamic Forex Trade Ideas for Tariff Truce:
| # | Pair | Bias & Entry Zone | Initial Stop | 1st Target | Risk/Reward | Core Rationale |
|---|---|---|---|---|---|---|
| 1 | USD/JPY | SELL 148.00 – 148.20 (recent spike into major supply) | 148.90 | 146.20 | ≈ 2.5 : 1 | Price has stretched >3‑σ above 20‑DMA and is stalling just under the 2014 trend‑line extension. 61.8 % Mar‑Apr retrace (146.85) already satisfied; momentum divergence on 4‑h RSI & Fed‑CPI risk favour mean‑reversion. Any softer US CPI print or verbal jawboning from Japanese authorities could accelerate a squeeze lower. |
| 2 | EUR/GBP | SELL 0.8410 – 0.8420 (re‑test of broken channel floor) | 0.8450 | 0.8330 | ≈ 2.7 : 1 | Euro underperforms on dovish‑ECB rhetoric; UK jobs report only mildly soft. Cross capped by 9‑DMA & descending trend‑line. ZEW pop failed to lift EUR, confirming relative‑strength shift to GBP. |
| 3 | CAD/JPY | BUY 105.70 – 105.90 (bull flag breakout) | 104.80 | 108.00 | ≈ 2.2 : 1 | Tariff truce + firmer crude keep CAD bid while JPY remains soft. Pair cleared descending‑channel top; 4‑h MACD turns positive. Upside void until Sept‑24 swing high near 108. |
| 4 | CHF/JPY | SELL 176.00 ± 15 pips (triple‑top / weekly pivot) | 177.20 | 172.50 | ≈ 2.9 : 1 | All‑time‑high zone coincides with weekly R2; risk‑on backdrop drains demand for CHF safe‑haven while BoJ headlines hint at eventual rate‑normalisation → skew favours pull‑back. Bearish divergence on daily Stochastics reinforces case. |
| 5 | EUR/USD | SELL 1.1110 – 1.1130 (minor bounce) | 1.1180 | 1.0950 | ≈ 2.6 : 1 | Pair broke 100‑DMA & 4‑h channel; UOB/ING both flag room to 1.1055/1.0945. US CPI risk still dollar‑supportive; ECB review keeps policy‑easing narrative alive. Oversold, but no base yet—sell rallies into prior support‑turned‑resistance. |
Conclusion
The 90‑day tariff pause has given markets their first genuine dose of “good” geopolitical news in months, unleashing a sharp—but still fragile—reflation bid. Behind the headlines, however, three structural forces continue to steer FX price action:
-
Policy patience, not pivot: The Fed’s hawkish hold, the ECB’s reluctance to tighten further, and the BoJ’s conditional path to renewed hikes create asymmetric rate‑differential pressures that still favour the USD over the EUR and keep the JPY pinned unless genuine intervention risk resurfaces.
-
Selective safe‑haven retreat: As recession odds are marked down, defensive flows into CHF and JPY are fading. That reversal is most visible where yield and commodity tailwinds are strongest—CAD/JPY and CHF/JPY—and where crowded euro longs are now being unwound.
-
Data‑dependence at the point of impact: Tuesday’s US CPI, Wednesday’s German data run, and a barrage of Fed speakers will validate—or quickly nullify—the tariff‑relief rally. High‑conviction trades must, therefore, combine tight technical timing with clear macro catalysts and disciplined risk‑to‑reward metrics.
The five setups highlighted—selling rallies in USD/JPY and EUR/USD, fading strength in EUR/GBP, buying dips in CAD/JPY, and shorting extremes in CHF/JPY—each exploit these themes within well‑defined chart structures and ≥ 2:1 reward profiles. Should US inflation surprise on the soft side, dollar shorts and JPY rebound trades will move fastest; a hotter print would likely extend the USD’s carry advantage and accelerate the unwind in haven crosses.
Either way, the next 24–48 hours will test whether Monday’s risk surge was a genuine inflection point or merely an over‑enthusiastic relief rally. Positioning with clarity on entry, exit, and rationale ensures traders capture the opportunity—while respecting the speed with which sentiment can shift in a tariff‑driven, data‑sensitive market.
Check out more Forex Trade Setups on our forex page.
Please visit our Disclaimer page.
Disclaimer
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets.
You should do your own thorough research or engage the services of a registered financial markets professional before making any investment decisions. TerraBullMarkets.com does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets or any financial instrument involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress.
All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TerraBullMarkets.com nor any of its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from TerraBullMarkets.com.
TerraBullMarkets.com and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. TerraBullMarkets.com and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and TerraBullMarkets.com are not registered investment advisors and nothing in this article is intended to be investment advice.
X markets are resetting after Monday’s euphoric rally sparked by the 90‑day US‑China tariff truce. The knee‑jerk surge in risk assets pushed the USD
