FED: MNI Fed Preview-May 2025: When In Doubt, Wait It Out

• WTI Crude is higher on the day ahead of details on US reciprocal tariffs due to be announced at 2100BST/1600ET. The potential impact on global demand from increased trade protectionism and rising OPEC+ supply is weighed against the potential for tougher sanctions on Iran and US tariffs on buyers of Russian oil.
• WTI May 25 is up by 0.8% at $71.8/bbl.
• President Trump has said that the tariffs will take effect immediately, while Treasury Secretary Bessent stated that there will be a “cap” and that countries can negotiate to reduce the tariff they face below this. There could be a tiered tariff structure along with specific reciprocal taxes, according to Bloomberg.
• The sharp rally in WTI futures earlier this week undermines the medium-term bearish condition and signals scope for a continuation higher near-term, exposing the next key resistance at $72.91, the Feb 11 high.
• Meanwhile, spot gold has consolidated below yesterday’s record high, as the market awaits Trump’s tariff announcement, with the yellow metal edging up by 0.3% to $3,123/oz.
• Analysts at Mizuho Securities said that those invested in gold as a safe haven are not likely to sell quickly even if the reciprocal tariff announcement is a non-event. They expect safe haven flows to ride out the storm.
• From a technical perspective, the trend condition in gold remains bullish, with sights on $3,151.5 next, a Fibonacci projection. 

Reuters is now reporting a slightly different angle to CBS earlier on low-value Chinese import tariffs - Reuters saying the de minimis exemption (for goods under $800) will be eliminated outright (see below), while CBS's source said there would be a $25/package fee on Chinese imports (presumably in place of eliminating the de minimis exemption which has proven logistically difficult to implement).

• Recall that the administration had decided to eliminate the de minimis exemption back in February but had to put it on hold as the postal service couldn't deal with inspecting and imposing tariffs on the large volume of incoming packages from China.
• The flat fee would appear to be a way of simplifying the process while dampening demand for low-value Chinese goods ordered by individuals.
• Reuters: "The Trump administration is considering revoking tariff exemptions for low-value shipments from China as part of Wednesday's tariff announcement....U.S. Officials had paused the decision given logistical issues complicating inspection of millions of the low-value shipments. "They figured it out," the source said, "De minimus [sic] is being stripped from China." 

• RES 4: 152.70 50.0% retracement of the Jan 10 - Mar 11 bear leg    
• RES 3: 151.30 High Mar 3  
• RES 2: 150.82/151.21 50-day EMA / High Mar 28  
• RES 1: 150.27 High Mar 31 
• PRICE: 150.01 @ 17:04 BST Apr 2 
• SUP 1: 148.70 Low Mar 31    
• SUP 2: 148.18 Low Mar 20 and a key short-term support 
• SUP 3: 147.42 Low Mar 13   
• SUP 4: 146.54 Low Mar 11 nad the bear trigger 

Near-term resistance in USDJPY remains intact. The primary trend direction is unchanged, it remains down and the latest recovery is considered corrective. Key resistance is unchanged, around the 50-day EMA, at 150.82. A clear break of this EMA would undermine the bearish theme and signal scope for a stronger rally towards 152.70, a Fibonacci retracement. The first key support to watch is 148.18, the Mar 20 low. A breach would be bearish.