S&P 500 Forecast: Bearish Trend Amid U.S. Tariffs and Trade War Fears

Market Overview

United States

The U.S. stock market closed higher on April 2nd, with major indexes like the Dow Jones (+0.56%), S&P 500 (+0.67%), and Nasdaq (+0.87%) posting gains as investors positioned themselves ahead of President Donald Trump’s highly anticipated speech. However, after the market closed, Trump announced sweeping tariffs on multiple countries, ranging from 10% to 49%, sparking deep concerns over a potential global 
trade war.

Following the announcement, U.S. equity futures plunged sharply, with Nasdaq futures down over 4% and S&P 500 futures dropping more than 3%. Major stocks like Apple, Tesla, and Nike saw significant after-hours declines. Meanwhile, safe-haven flows pushed gold and U.S. Treasuries higher, sending yields lower and gold prices near record highs.

Europe

European markets came under heavy pressure during trading on April 3rd after U.S. President Donald Trump announced a 20% import tariff on goods from the European Union, as part of a broader wave of new protectionist measures. European futures, such as the Euro Stoxx 50 (FESX1!), dropped nearly 2%, reflecting widespread concerns over export declines, supply chain disruptions, and a potential blow to regional economic growth.

Despite the pressure, the euro saw a strong rebound, climbing above $1.09, supported by safe-haven flows moving out of the U.S. dollar and falling U.S. Treasury yields. Additionally, expectations that the European Central Bank (ECB) will soon cut interest rates—amid Eurozone inflation falling to 2.2%, its lowest since November 2024—further boosted demand for the euro.

BTC/USD

Prediction: Neutral to Short-Term Bearish

Bitcoin is currently trading around $83,500 after a strong rebound to $88,000, which was rejected at the resistance zone of $85,500–$88,000. Although there is some short-term buying pressure from the $82,000 support area, selling pressure remains dominant as the market reacts negatively to news about new U.S. tariff packages. The current price structure suggests a continued correction if the $82,000 support fails to hold. 

FUNDAMENTAL ANALYSIS

Monetary Policy and U.S. Impact

President Trump announced comprehensive tariffs on all countries, with a base rate of 10%, sparking volatility across global financial markets—especially in crypto.

Initially, BTC saw a mild rebound due to a "relief effect," but once the full tariff details were released, the market quickly turned bearish again, revealing fragile investor sentiment.

Amid increasing economic uncertainty, some analysts suggest Bitcoin may act as a safe haven asset, though short-term pressure from policy and interest rate factors has kept institutional inflows limited for now.

Market Sentiment

The Fear & Greed Index stands at 44, reflecting a slightly fearful sentiment, bordering on neutral.

Previously, the index dropped to 25 (extreme fear) as a reaction to new tax policies—indicating extreme pessimism, which could be a potential medium-term reversal signal.

Market sentiment is still undecided, suggesting BTC could continue to trade within a wide range before establishing a new trend.

Geopolitics & Market Drivers

The U.S. imposing a 25% tariff on foreign cars and higher duties on the EU, China, and Japan is escalating global trade tensions.

Potential retaliatory actions from China/EU may trigger another wave of sell-offs in crypto.

However, if U.S. tax policy is seen as a turning point, institutional capital could return, fueling new momentum for BTC.

Bitcoin mining costs are rising due to tariffs on chips and hardware from China, potentially hurting U.S.-based miners, reducing hash rate, and negatively impacting sentiment.

TECHNICAL ANALYSIS 

Key Resistance Levels

●       $85,000 – $85,550: Immediate resistance, including the 50% Fib level and the 200 EMA. A breakout may target:

●       $86,800: Next resistance level

●       $88,000 – $88,772: Recent high. A breakout could open up a move to $92,000

Key Support Levels

●       $82,800: Short-term support, recent session low

●       $80,000: Major psychological and technical support

●       $76,600: Deeper support if the downtrend continues

Technical Indicators:

RSI: 46.95 – Below the neutral 50 level, trending downward, indicating bearish momentum. RSI previously bounced from oversold territory but lacks follow-through strength.

Volume: Spiked significantly during reactions to tariff news – indicating heavy profit-taking and position reallocation. Sustained high volume near support could attract bottom-fishing buyers.

Price Action:

●       Price is currently hovering near the Bullish Order Block and demand zone at $82,000–$83,000, with short-term bounce potential.

●       If the price rebounds but gets rejected again at $85,000, investors should be cautious of a deeper correction.

●       A break below $82,000 could push BTC toward $80,000, and price action around that level will be key to watch

SPX – S&P 500 Index

Prediction: Short-Term Bearish

The S&P 500 Index (SPX) is currently in a clear short-term downtrend, with a sequence of lower highs and lower lows on the 4H timeframe. Price is hovering around the support zone of 5,622 – 5,640 after bouncing from the recent low of 5,488. While there has been some bottom-fishing at Bullish Order Blocks, it's not enough to confirm a trend reversal. The dominant trend remains bearish, especially under macroeconomic pressure from recent U.S. policy announcements.

FUNDAMENTAL ANALYSIS

Trade Policy & Impact from President Trump

President Donald Trump shocked markets by imposing widespread import tariffs, including:

●       34% on Chinese goods

●       20% on EU products

●       10% on UK imports

●       24% on Japanese goods

●       25% on imported cars and components

●       Up to 49% on goods from Vietnam and Cambodia

These are the largest tariffs in years, sparking fears of a full-scale global trade war, which could hurt corporate profits, disrupt global supply chains, and slow U.S. economic growth.

Market Impact & Investor Sentiment

S&P 500 futures dropped over 3% following the announcement, indicating widespread investor pessimism.

Stocks with global supply chains like Apple, Nike, Tesla, Amazon, Nvidia all plunged 5% to over 14%.

Gold surged, reflecting a shift toward safe-haven assets.

USD weakened, and bond yields fell, signaling lower growth expectations and potential for extended Fed support.

Economic Data & Monetary Policy

The ADP jobs report came in better than expected, but import-driven inflation risks from the tariff policy may make the Fed more cautious about rate cuts in 2025.

The 10-year Treasury yield dropped to 4.13%, showing growing concern in the bond market.

TECHNICAL ANALYSIS

Key Resistance Levels

●       5,713.26: Short-term resistance aligned with the EMA34. A breakout above could open room for recovery.

●       5,866.43: Major resistance aligned with the EMA200 – a break here would signal a potential trend reversal.

Key Support Levels

●       5,622.44: Immediate support. If broken, the downtrend may accelerate.

●       5,502.42: Strong support zone with a Bullish Order Block – previous strong rebound occurred here.

●       5,488.73: Recent low – a break below could push price into deeper downside territory.

Technical Indicators:

RSI (50.21): Hovering around neutral after a rebound. If it turns down again, deeper correction risks increase.

Volume & Price Action: No significant surge in volume, suggesting the rebound may be temporary. Price remains capped below major EMAs.

Investors should closely watch responses from key U.S. trade partners such as China, the EU, and Japan, as their countermeasures could strongly influence the next market direction. In addition, upcoming data like the Nonfarm Payrolls report and Fed Chair Jerome Powell’s speech later this week will be crucial for determining SPX’s medium-term trend.

EUR/USD

Prediction: Increase

EUR/USD has confirmed a breakout from the previous downtrend and is now in a clear upward trend. The pair has broken through the key resistance zone at 1.08747 and continues to rise toward the 1.09342 – 1.09544 range. The structure of higher highs and higher lows, along with a breakout from the descending channel, supports the short-term bullish outlook.

FUNDAMENTAL ANALYSIS 

Monetary Policy & Impact from ECB & Fed

The European Central Bank (ECB) is under pressure to ease monetary policy as Eurozone inflation dropped to 2.2% in March – the lowest level since November 2024. Core inflation is now at 2.4%, the lowest since January 2022, raising expectations that the ECB could cut rates by up to 65 basis points this year.

Meanwhile, the Federal Reserve (Fed) faces pressure from the economic fallout of President Trump’s tariff policies, with 10-year U.S. Treasury yields plunging to 4.04%, the lowest in five months. Markets are now pricing in a sooner-than-expected rate cut from the Fed.

Trade Tensions & Market Sentiment

Trump announced a 10% blanket tariff on all imports, including 20% on EU goods, stoking fears of a global trade war.

Although the USD gained slightly against several Asian currencies, the EUR is benefiting from safe-haven flows into European assets, as concerns grow over U.S. economic growth.

Global equities, especially in tech, have been sold off heavily, while gold and JPY surged due to their safe-haven status.

Markets are currently in a phase of high volatility due to ripple effects from global trade partners and looming economic retaliation measures.

TECHNICAL ANALYSIS

Key Resistance Levels

●       1.09544 (Short-Term High): A break above this level could lead to a move toward 1.10080.

●       1.10080: A major resistance zone; price reaction here will be crucial.

Key Support Levels

●       1.09342: Recently broken resistance, may now act as support to fuel further gains. ● 1.08747: Important nearby support. If broken, it could trigger a deeper pullback.

●       1.07886: Medium-term support, corresponding to the accumulation base.

●       1.07207: Near the 200 EMA, a strong technical support.

●       1.06281: Deeper key support in case of a trend reversal.

Technical Indicators:

RSI: 73.18 – Currently in overbought territory, suggesting a potential short-term pullback. However, there are no signs of divergence or clear reversal yet.

Price Action:

●       The price has broken out of a descending channel and cleared major technical levels, confirming the bullish short-term trend.

●       As long as price holds above 1.0934–1.0874, it may continue climbing toward 1.0954–1.1008.

EUR/USD is strongly supported by both technical momentum and market sentiment, despite headwinds from U.S. tariffs. However, risks of a technical correction remain due to the overbought RSI. Traders should closely monitor:

●       ECB policy decisions

●       Potential EU retaliatory measures

●       Key U.S. economic data releases

 

 

 

 

 

 

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