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• Stocks’ recovery stalls as fresh tariffs threaten sentiment
• Geopolitical jitters in the Middle East push gold higher, dollar lower
• Technical levels to watch: 21,500 support and 22,000 resistance on Nasdaq 100 futures
   

Trade Tensions Resurface Just as Optimism Builds

Just when investors began to hope for progress on the global trade front, President Trump has reignited tensions with new threats of unilateral tariffs. These proposed measures, aimed at over 20 trading partners, are expected to be detailed in letters sent out before a looming July 9 deadline. That announcement sent a shiver through financial markets, triggering a sell-off in US equity futures and a slide in the dollar, while pushing EUR/USD to new 2025 highs around the 1.16 mark. The S&P 500 futures was down half a percent near the 6,000 level.

This development puts the brakes on what had been a strong rally from the April lows. Market participants are now asking tough questions: without tangible progress on trade and given elevated stock valuations, is it worth holding risk assets?

The market’s reaction to seemingly positive US-China trade signals was lukewarm—investors may be tired of vague promises and more focused on concrete outcomes. And when headlines are dominated by “take it or leave it” deals from Washington, investor caution is understandable.

Geopolitical Fears Stoke Risk Aversion

Compounding the uncertainty, tensions in the Middle East have escalated sharply. Reports suggest Israel may be preparing for military action against Iran, raising concerns of a broader regional conflict. Iran’s defense minister has warned of retaliation against US assets in the region, and with nuclear deal negotiations at a standstill after five rounds of talks, the probability of military escalation is rising.

This mix of trade friction and geopolitical strain has triggered a classic flight to safety: gold is up, oil prices have jumped, and equities are under pressure.
 

Nasdaq 100 Technical View: Resistance Holds, Support in Sight

From a technical perspective, the Nasdaq 100 future has struggled at the 22,000 mark, which is telling. Despite a couple of breakout attempts, the index couldn’t hold above this key resistance. A rising wedge formation appears to be breaking down, and the RSI is flashing negative divergence near overbought levels—both signs that the bullish momentum may be running out of steam.

(Click on image to enlarge)

If current weakness persists, watch the 21,500–21,560 zone. This has been a critical battleground between bulls and bears and could offer some support. A decisive break below this level, however, would open the door for deeper losses—particularly if the May 23 low at 20,727 is breached. That would mark the first lower low since the April rally and potentially signal a trend reversal.

On the upside, the 21,790 level (yesterday’s low) and the psychological 22,000 mark remain the key hurdles. A daily close above 22,000, despite all the macro uncertainty, would be a bullish sign and could pave the way for fresh all-time highs.

So, the market’s fate hangs in the balance. Trade tensions and Middle East unrest have taken the wind out of the market’s sails just as it was gearing up for new highs. While the broader uptrend is still intact for now, caution is warranted. With July 9 approaching and volatility creeping back, traders should keep an eye on key levels—and be ready for swift moves in either direction.

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