Understanding the Forex Implications of Trump's New Trade Deal with China

The U.S. and China have hit pause on their trade fight. A new deal cuts tariffs sharply for 90 days. For forex traders, this means quick shifts in the currency markets. The dollar is gaining. The yuan is holding steady. Traders are staying sharp and ready.

Let’s break it down.

What the Trade Deal with China Says

The U.S. has slashed tariffs on Chinese goods—from a steep 145% to just 30%. In return, China has dropped its tariffs on U.S. products from 125% to 10%. These cuts only last three months. But for now, they take pressure off both sides.

The market took it well. Stocks rallied. The S&P 500 and Nasdaq jumped. Traders saw it as a break from trade tension, at least for now.

But experts are careful. This isn’t a full deal. It’s a timeout. Talks are still on. And if they fail, those tariffs could return fast.

Tora Markets is one of the brokers traders are turning to for this kind of news-driven volatility. With quick execution and flexible trading tools, it's a solid option for reacting to fast-moving forex shifts like this.

How Trump's New Trade Deal With China Moves the Global Forex Market

Trade deals shift currency demand. Lower tariffs boost trade flow. That drives investor interest and market confidence. More traders enter the market, liquidity improves, and price moves become sharper and faster. Currencies tied to those economies respond fast. If one side exports more, its currency may rise from stronger demand. If imports grow, the other side may see its currency ease. These shifts can happen quickly as new trade flows start to show.

The Dollar Gets a Boost

The U.S. dollar surged on the news. Stronger trade prospects helped lift it across the board.

The euro dropped 1.5% to $1.1078. That’s a big move in a short time. The yen also fell. The dollar gained 2.1% against it, pushing USD/JPY to 148.49.

Why is the dollar rising?

Simple. Less trade pressure means more faith in the U.S. economy. If American companies sell more abroad, growth could pick up. That makes the dollar more appealing.

The Yuan Holds Steady

The Chinese yuan didn’t swing much. But it held firm. That’s a sign traders believe China can benefit from this deal too.

Lower tariffs help Chinese exports. That supports factory activity and jobs. If exports hold up, so does China’s economy. That eases pressure on the yuan.

A stable yuan also sends a message. It says China is managing things. No panic, no sharp moves. That builds trust in its markets.

Impact on Gold/USD

Gold tends to move opposite the dollar. When the dollar gains, gold often dips. After this trade deal news, the dollar rose fast. That put pressure on gold. But not everyone is selling. Some traders still see gold as a safety net in case talks fall apart. If the deal breaks down, gold could bounce. Until then, it may stay under pressure.

A smart trade here might be to wait for gold to hit key support, then go long with a tight stop. This way, if talks collapse, you’re ready. If not, your risk stays low. Watch for confirmation like a bounce off support or bullish candle. Avoid chasing price. Let the setup come to you. And always size the trade based on your risk limit.

Impact on EUR/USD

The euro fell after the deal was announced. It dropped 1.5% to $1.1078. Traders saw stronger U.S. growth ahead and shifted into dollars. Europe still faces slow growth and sticky inflation. That makes the euro less attractive. If the deal sticks and the U.S. outlook keeps improving, EUR/USD could slip further.

A smart trade move here could be to short EUR/USD on rallies. Look for the price to stall near recent resistance and wait for signs of rejection. With U.S. momentum strong and Europe lagging, downside setups may offer better reward.

Impact on USD/JPY

The dollar gained 2.1% against the yen after the trade deal news. USD/JPY hit 148.49 as traders moved into the dollar. Japan’s slow recovery and low rates make the yen less attractive. If the U.S. keeps its momentum, this pair may keep climbing.

A smart trade here is to look for long setups on dips. Wait for price to test support, then enter with a stop just below. Watch U.S. economic updates and rate talk from the Fed to guide the move.

What This Means for Other Currencies

This kind of deal affects more than just the dollar and yuan.

Currencies tied to global trade—like the Australian and New Zealand dollars—often move with China’s outlook. A better China trade picture can boost them.

Emerging market currencies also benefit. Investors often leave risky assets during trade fights. But when tensions ease, they come back. That helps currencies in places like South Korea, Brazil, and Mexico.

What Are Forex Traders Doing After Hearing About Trump's New Trade Deal With China

Short-term, traders are favoring the dollar. It’s seen as strong and steady. With fewer trade risks, U.S. growth might pick up again. That makes the greenback more attractive.

Some traders are betting on more gains in USD/JPY. With Japan still struggling with weak growth, and the Fed holding rates firm, the pair could rise further.

Others are watching EUR/USD. Europe has its own issues—slowing growth, sticky inflation. If the U.S. outlook improves while Europe stalls, that spread may widen.

How can I trade in Forex using high leverage in this case?

High leverage trading can amplify both gains and losses. In this case, volatility is up, and trends are forming fast. If you're confident in the dollar's strength, you could use leverage on USD/JPY or short EUR/USD with tight risk control. Only risk what you can afford to lose. Use clear stop-losses and avoid overexposure.

Tora Markets also offers high leverage options, which some traders use during these volatile swings. It's a way to boost gains on small price moves, but it comes with higher risk. Always trade with a plan and know your limits.

What to Watch Next

The 90-day window is key. If talks go well, this deal could lead to more cuts. That would support global trade—and likely weaken the dollar over time, as risk appetite grows.

But if talks break down, markets could reverse. Tariffs would snap back. The dollar might jump even more as a safe haven. Risk currencies would fall fast.

Also, central banks are watching. If this deal fuels growth or inflation, they may respond. The Fed, the ECB, and the People’s Bank of China could all adjust their plans. That would shake up forex pairs.

Inflation Still Matters

Some analysts say this deal won’t stop inflation. Yes, it helps trade. But prices are still high in many sectors. Tariff cuts don’t fix supply issues or labor costs.

If inflation sticks, the Fed may keep rates high. That could keep the dollar strong for longer.

Traders should watch inflation data closely. If price pressure stays high, rate policy could stay tight. That means forex trends may hold.

This US-China Trade Deal Is Not a Sure Thing

Big names on Wall Street have weighed in. Mike Wilson from Morgan Stanley says the market may have hit bottom. He expects gains ahead.

But others, like Mohamed El-Erian, are more cautious. He says the deal is a nice surprise—but not a fix. Roger Altman at Evercore calls it a first step, not the last.

Most agree: This is a short-term win. But the bigger issues are still on the table.

Final Thoughts for Traders

This deal matters. It gives markets a breather. It boosts the dollar. And it opens the door for more progress.

But it’s not a solution yet.

Forex traders should stay alert. Watch news from the talks. Track inflation. Follow central banks. And don’t assume the trend will last.

For now, the dollar is king. But things can change fast.

Tora Markets stands out with low spreads and high leverage. That gives active forex traders more control in fast markets like this.