Following a weekend marked by significant tariff announcements, Nasdaq futures opened with a substantial 300-point gap down, setting a volatile tone for the trading session. The initial decline saw prices reaching lows of 21,943 before the market entered a consolidation phase.
Asian & European Sessions: Consolidation and Anticipation
During the Asian session, market activity was subdued as traders awaited further developments on trade policies. The European session experienced a temporary spike, attempting to fill the overnight gap, before settling around last week’s value area low, indicating uncertainty ahead of the U.S. session.
New York Session: U.S.-Mexico Tariff Developments Trigger Market Reactions
The New York session began with a dip, breaking below the prior consolidation range. Market sentiment changed sharply after President Donald Trump and Mexican President Claudia Sheinbaum reached an agreement to delay the planned 25% tariff on Mexican imports for a month. As part of the deal, Mexico pledged to send 10,000 National Guard troops to its northern border in an effort to curb illegal immigration and drug trafficking.
This development provided temporary relief to the markets, with the Nasdaq reclaiming key technical levels, including the monthly Volume Weighted Average Price (VWAP), which has recently acted as a significant price magnet.
Outlook: Navigating Uncertainty Amid Trade Tensions
If Nasdaq futures establish acceptance above the monthly VWAP, a push toward last week’s value area high (21,668) remains probable. However, if sellers regain control and price slips back below VWAP, downside risk increases, potentially leading to a retest of the overnight low (20,943) and possibly a retest of last week’s swing low.
While the temporary pause in tariffs on Mexican imports offers short-term relief, the situation remains fluid. Further developments with trade negotiations, particularly involving Canada and China, could continue to drive volatility in the coming sessions.
