President Donald Trump announced yesterday a 90-day suspension of tariff increases that had affected dozens of trade partners, while simultaneously raising tariffs on China to 125%.

The president's policy shift came approximately 13 hours after reciprocal tariffs took effect for 56 countries and the European Union, sparking market turmoil and fueling fears of a U.S. recession. Immediately afterward, Trump faced intense pressure from business leaders and investors demanding a policy reversal. "I thought people were overreacting a bit," Trump told reporters at the White House on Wednesday when asked why he reversed course. "They squealed a little, got a little scared."

According to customs instructions published late Wednesday night, the new tariff rates for China took effect at 12:01 a.m. Washington time on April 10, along with the new 125% tariff. "In light of China's disregard for global markets, I hereby raise the tariff levied by the United States of America on China to 125%, effective immediately," Trump wrote in a social media post.

Following the suspension of tariffs for the rest of the world, the U.S. dollar strengthened, as did the stock market, which posted its strongest rally since 2008. The S&P 500 index surged by 9.5%, bouncing off bear market territory. The tech-heavy Nasdaq 100 jumped by 12%. Economists at Goldman Sachs Group Inc. withdrew their forecast of a U.S. recession.

U.S. Treasury yields cautiously returned to more normal levels. The 2-year yield briefly exceeded 4% as traders lowered expectations of Federal Reserve rate cuts this year.

Investors and analysts will now turn their focus to China to see whether it raises its tariffs or signals a willingness to negotiate. Trump said he does not believe he will need to raise tariffs further to force negotiations. "I can't imagine that," said Trump. "I don't think we'll have to do that again." He also said he had been considering lifting the tariffs over the past few days during discussions with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick.

However, it's important to note that U.S. tariffs on steel, aluminum, and automobiles remain unchanged. Tariffs of 10% or 25% on Canadian and Mexican goods—excluding those covered under the North American trade pact—will also remain. Imports from the EU continue to be taxed at 10%, despite the bloc's announcement of retaliatory measures on metal tariffs.

Trump's decision to further raise tariffs on Chinese imports came after Beijing announced plans for retaliatory duties of 84% on American goods, set to take effect today.

As mentioned above, all of this is likely to give the U.S. dollar an advantage over a number of risk-sensitive assets in the currency market.

As for the current EUR/USD technical outlook, buyers now need to focus on reclaiming the 1.1020 level. Only then can they aim for a test of 1.1090. From there, reaching 1.1140 is possible, but doing so without support from major players could be quite challenging. The ultimate upward target is the 1.1215 high. In the event of a decline, significant buyer activity is expected only around 1.0945. If none appear there, it would be best to wait for a retest of the 1.0890 low or to open long positions from the 1.0845 level.

Regarding the current GBP/USD technical picture, pound buyers need to break through the nearest resistance at 1.2870. Only then can they aim for 1.2930, above which a breakout would be difficult. The ultimate target is the 1.2985 level. If the pair falls, the bears will attempt to retake control at 1.2810. If successful, a breakout of that range would deal a serious blow to the bulls and push GBP/USD toward the 1.2745 low, with a potential move down to 1.2695.