Trump Trade War Sparks Market Volatility Amid US-China Talks and Currency Pressure

Trump Trade Talks Add Volatility to Global Markets

A high-level delegation is set to meet in London on Monday, adding to market uncertainty. US President Donald Trump confirmed that Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer will lead the talks with Chinese officials. China’s Vice Premier He Lifeng will represent Beijing during the visit. Trump expressed optimism, calling the meeting a positive step.

These US-China talks aim to ease ongoing trade tensions, including disputes over critical minerals and technology exports. These issues have pressured global markets and increased investor anxiety over broader tariff policies.

On the other hand, a temporary truce struck in Geneva on May 12 sparked a short-term rally in US markets. The S&P 500 rebounded sharply after the two nations agreed to roll back some tariffs. However, deeper concerns remain unresolved. Additionally, tensions between China and Taiwan are adding pressure to the global economy. The unpredictable trade stance by nations increases uncertainty, leaving markets vulnerable to potential volatility in the weeks ahead.

China Faces Export Slowdown as Trump Trade War Escalates

Despite ongoing trade tensions between the US and China, China’s export growth slowed sharply in May. The chart below shows exports rose only 4.8% year-on-year, marking the weakest pace in three months and missing expectations of 5.0%.

On the other hand, April saw an 8.1% increase. Meanwhile, imports declined significantly, falling 3.4% compared to a smaller 0.2% drop the previous month. These figures highlight rising pressure from US tariffs and weakening global demand.

Moreover, shipments to the United States dropped 34.5% year-on-year in May, a sharp escalation from the 21% decline in April. Despite the 90-day tariff suspension that began in April, tensions remain high. Tighter customs inspections, a near-halving of rare earth exports, and slower electric machinery shipments have further weakened export momentum.

The chart below shows that China’s trade surplus rose to $103.22 billion in May, up from $96.18 billion in April. However, this surplus was accompanied by factory-gate deflation and declining imports of key commodities such as crude oil, coal, and iron ore.

These indicators highlight fragile domestic demand and growing external risks. In response, Beijing introduced monetary easing measures and launched 500 billion yuan in low-cost loans to support consumption.

Currency Markets React to Trump Trade War Uncertainty

Chinese Yuan Holds Key Support as Trade Tensions Linger

The weekly chart of USD/CNH shows strong consolidation near the 7.18 level. The price has formed multiple rounded bottoms, suggesting a potential inverse head and shoulders pattern.

However, the pair is challenging strong resistance at 7.35, and a breakout above this level could trigger a move toward the long-term resistance at 7.50. The price is currently holding above key support, indicating indecision. A drop below 7.15 could weaken bullish momentum and push the pair into a deeper correction.

The daily chart for USD/CNH also shows a failed breakout above 7.3660, followed by a steady decline. The price currently trades near the key support zone at 7.15. The earlier breakout from the inverse head and shoulders pattern triggered upside momentum, but the rally faded quickly.

A fake breakout in April led to sharp selling pressure. The 50-day and 200-day moving averages now act as resistance. The RSI hovers below 50, signaling weak momentum. A break below 7.15 could confirm further downside, while a move above 7.3080 is needed to regain bullish strength.

Japanese Yen Tests Support as Traders Watch Trump Policy Moves

The daily chart for USD/JPY shows a head and shoulders pattern, followed by a breakdown below the neckline at 149.20. The price has since declined and now trades near 144.44. The 50-day moving average is acting as immediate resistance, while the 200-day moving average remains flat.

The strong support lies near the 140 level, marked by a previous consolidation zone. The RSI sits near 50, indicating neutral momentum. A break below 140 could trigger further downside, while a close above the 200-day moving average may revive bullish momentum.