Trump denies WSJ report on lower tariffs

President-elect Donald Trump took to Truth Social on Monday to refute a report suggesting he might soften his plans for sweeping tariffs upon returning to the White House, heightening uncertainty regarding one of his most anticipated policy initiatives.

This could have been intentional.

Trump and his team have left markets, businesses, and foreign nations speculating about his approach to new tariffs, and Monday’s Washington Post article added to these uncertainties. The Post, citing sources familiar with the situation, reported that his aides were considering reducing expansive tariffs. Instead, they would enforce more targeted tariffs on all countries, focusing on essential imports.

Not so fast, Trump countered. He stated, “The story incorrectly states that my tariff policy will be pared back. That is wrong.”

What is accurate, however, remains unclear. During his campaign, Trump committed to implementing 10% to 20% tariffs on all imported goods, with tariffs potentially reaching 60% on Chinese products. Following his election, Trump again unsettled markets by threatening to impose an additional 10% tariff on goods from China and 25% on products from Mexico and Canada.

Equities lower in Europe
European stocks fell on Tuesday as traders focused on regional inflation data and its implications for the European Central Bank’s interest rate trajectory.

The Stoxx 600 decreased by 0.4%, primarily due to losses in the banking and insurance sectors. This decline comes after the regional benchmark recorded its largest increase since November in the previous session. Meanwhile, US stock futures remained relatively stable.

French inflation rose in December, reinforcing the ECB’s approach of gradually lowering interest rates. However, the Euro lost some of its earlier gains after the French inflation figure came in slightly below expectations. A euro-area report expected later on Tuesday will likely indicate an increase in inflation to 2.4% from 2.2%.

DXY below 108.0

Yesterday’s WSJ report on Trump’s tariffs caused a sharp decline in the US Dollar, dropping below 108.0. Technical indicators were already significantly overbought prior to the report, making a downward correction inevitable, with the WSJ article serving as a catalyst.

Currently, this decline may persist, with initial support levels at 107.80 and, crucially, 107.30. A breach of this support is necessary for downside pressure to intensify. If not, the upward trend remains robust.

EURUSD above 1.04

The Euro successfully surpassed the 1.0330 resistance zone in yesterday’s trading and continued to climb today, peaking at 1.0433, marking its largest single-day gain since August of the previous year. However, for this rally to signal a stronger trend, it needs more time to develop. Initially, the Euro must break above 1.0450 and 1.0490 on the daily chart. For a new bullish trend to be established, there must be a definitive weekly close above 1.05. If this does not occur, parity will be the next critical level to monitor.

Oil hovering near $76

Brent Crude soared to 77.40 during yesterday’s trading, a surge I had anticipated since mid-November. Nevertheless, it closed lower at around $76, even as technical indicators remain bullish across most timeframes, nearing overbought conditions. The daily chart suggests that the upward rally will likely resume soon, while the recent decline is viewed as a short-term phenomenon, provided it stays above $75. If this level holds, $78 may be the next target to watch going forward.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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