The GBP/USD currency pair attempted to resume its downward movement on Tuesday, but with too much uncertainty. The British pound entered a challenging fundamental situation last week, resulting in a 3-cent decline against the U.S. dollar. However, over the weekend, we indicated that we do not believe in further growth of the American currency, unless the war in the Middle East resumes. Let's recall what led to the British currency's fall last week.

Firstly, there was yet another political crisis in the UK. Keir Starmer's party suffered a significant defeat in the local elections, and around 40 party members called for Starmer's resignation. While Starmer did not step down, the crisis is evident. Secondly, the geopolitical situation sharply deteriorated last week. Another round of negotiations between Iran and the U.S. ended in failure, and the market began preparing for a new round of conflict. Thirdly, last week it was revealed that U.S. inflation accelerated to 3.8%, which slightly increased hawkish expectations regarding the Federal Reserve's monetary policy. Fourthly, at the end of last week, forecasts for British inflation in April were released, indicating that the UK consumer price index could slow to 3%, making it nearly impossible for the Bank of England to tighten policy, a market expectation that had been actively anticipated in recent weeks.

These four factors led to a 300-pip decline in the pound sterling. However, one could say that all these factors have already been priced in. The market is prepared for weak inflation in the UK, the BoE's abandonment of tightening policy, a potential renewal of the war in the Middle East, and even for the Fed's rate hike by the end of the year. On what basis does the dollar intend to strengthen further? As we have already mentioned, it is only based on the resumption of the war between Iran and the U.S.

By the way, the British inflation report will be released this morning, and we believe that traders may be in for a big surprise. If inflation indeed drops to 3%, we think the market has already priced it in. If inflation falls below 3%, the BoE may return to easing monetary policy, which could put additional pressure on the pound. If inflation turns out to be above the forecast, then the degree to which it exceeds expectations will matter. Between 3.1% and 3.3%, the figure could be considered neutral. Above 3.3% would indicate that inflation is accelerating, compelling the British central bank to raise the key interest rate. In this latter case, the British pound could resume its growth.

Of course, we should not overlook the geopolitical factors. We would have long stopped paying attention to Donald Trump's statements and various insider information, as in most cases, this information is unconfirmed, overtly false, or simply used by Trump as leverage against Iran. However, the market continues to react to it, which is why movements in the currency market continue to depend on geopolitical news that is nearly impossible to predict in advance.

The average volatility of the GBP/USD pair over the last 5 trading days is 101 pips. For the pound/dollar, this value is considered "average." On Wednesday, May 20, we expect movement within a range bounded by levels 1.3289 and 1.3491. The upper channel of the linear regression has turned upward, indicating a recovery of the bullish trend. The CCI indicator has not formed any signals recently.

Nearest Support Levels:

• S1 – 1.3367
• S2 – 1.3306
• S3 – 1.3245

Nearest Resistance Levels:

• R1 – 1.3428
• R2 – 1.3489
• R3 – 1.3550

Trading Recommendations:

The GBP/USD currency pair has sharply declined, making the bullish trend currently irrelevant. Trump's policies will continue to exert pressure on the U.S. economy, so we do not expect the dollar to strengthen in the long term. However, 2026 is proving to be super positive for the dollar so far. Thus, long positions targeting 1.3550 and 1.3611 can be considered when the price is above the moving average. If the price is below the moving average line, short positions with targets of 1.3306 and 1.3289 can be traded on technical grounds. The market situation has turned upside down in just one week.

Explanations for the Illustrations:

• Linear Regression Channels: Help define the current trend. If both are directed in the same direction, it indicates a strong trend.
• Moving Average Line (settings 20,0, smoothed): Determines the short-term trend and direction in which trading should be conducted.
• Murray Levels: Target levels for movements and corrections.
• Volatility Levels (red lines): Likely price channel where the pair will trade in the coming days based on current volatility metrics.
• CCI Indicator: Its entrance into the oversold zone (below -250) or the overbought zone (above +250) indicates that a trend reversal is approaching in the opposite direction.

The EUR/USD currency pair resumed its decline on Tuesday, once again driven by geopolitical factors. Recall that on Monday, news leaked that the White House was willing to make some concessions to Iran and even temporarily lift all sanctions regarding Iranian oil. Shortly afterward, Donald Trump announced that new attacks on Iran were postponed for some time, as leaders from Qatar, Saudi Arabia, and the UAE urged him not to resume the war against Iran. According to Donald Trump, these countries believe that an agreement with Iran may be possible in the near future, and thus, the resumption of hostilities would only hinder diplomacy.

However, by Tuesday, the American president once again hinted at possible strikes if a deal is not signed. Thus, every day, Trump manages to share both optimistic news and new threats. The market is forced to react, if not to every message, then to every second one, as they alternate. We continue to observe "swings" in the market.

Traders can only speculate about the progress of the negotiations. No official information has been released to the public. Information must be gleaned from various insiders, most of whom could be banal "leaks." For instance, Trump has given several private and exclusive interviews to Axios. However, what distinguishes the information presented through Axios from that coming directly from the U.S. president? In fact, nothing. In the first case, it is "insider information"; in the second, it is official. But what difference does it make to traders if neither is confirmed by any evidence?

In our view, Trump continues to exert psychological pressure on Iran through constant changes in rhetoric. Tehran is no longer reacting to the latest threats coming from the White House. If we summarize all the incoming information and add the fact that a ceasefire is still in place, it is probable that negotiations are indeed taking place. However, how close the parties are to reaching an agreement remains unclear.

Furthermore, the information coming from Iran and the U.S. indicates that there is still a long way to go before a deal is struck. The demands of Tehran and Washington differ significantly. Therefore, it is not clear what kind of agreement could be on the table in the coming days. Likely, the market also does not understand this, as it maintains a relatively high demand for the American currency. Even if war does not resume, a prolonged, stagnant conflict will still provoke another surge in energy prices. Strategic oil reserves worldwide, including in the U.S., are decreasing, while the U.S. aims to profit significantly from the Strait of Hormuz blockade. However, they seem to have forgotten that increasing exports requires higher oil production volumes.

The average volatility of the EUR/USD currency pair over the last five trading days, as of May 20, is 57 pips and is characterized as "average." We expect the pair to move between levels 1.1540 and 1.1654 on Wednesday. The upper channel of the linear regression has turned upward, indicating a change in trend to bullish. In fact, the upward trend of 2025 could have resumed a month ago. The CCI indicator has entered the overbought area and formed two "bearish" divergences, signaling the start of a downward correction that is still ongoing.

Nearest Support Levels:

• S1 – 1.1597
• S2 – 1.1536
• S3 – 1.1475

Nearest Resistance Levels:

• R1 – 1.1658
• R2 – 1.1719
• R3 – 1.1780

Trading Recommendations:

The EUR/USD pair continues its downward movement, which is presumed to be a correction within a larger global upward trend. The global fundamental background for the dollar remains extremely negative, and only geopolitical factors regularly provide support. With the price positioned below the moving average, short positions can be considered with targets at 1.1540 and 1.1536. Above the moving average line, long positions are relevant with targets at 1.1780 and 1.1841. The market continues to move away from geopolitical factors, but the last week has been disappointing for the euro. We do not expect a stronger decline at this time, but no one knows how relations between Iran and the U.S. will evolve from here.

Explanations for the Illustrations:

• Linear Regression Channels: Help define the current trend. If both are directed in the same direction, it indicates a strong trend.
• Moving Average Line (settings 20,0, smoothed): Determines the short-term trend and direction in which trading should be conducted.
• Murray Levels: Target levels for movements and corrections.
• Volatility Levels (red lines): Likely price channel where the pair will trade in the coming days based on current volatility metrics.
• CCI Indicator: Its entrance into the oversold zone (below -250) or the overbought zone (above +250) indicates that a trend reversal is approaching in the opposite direction.

The GBP/USD currency pair also pulled back on Tuesday, driven by new negative news from the U.S. Throughout the day, a variety of messages emerged from the Middle East and across the Atlantic; however, the market focused only on the pessimistic ones. In reality, Donald Trump canceled the planned attack on Iran scheduled for Tuesday at the request of the leaders of the UAE, Saudi Arabia, and Qatar. Traders learned about this directly from Trump, so the actual circumstances remain unclear. Nevertheless, information about ongoing negotiations continues to reach the market. Therefore, in our view, there is slightly more positive sentiment than negative at the moment. Unfortunately, the UK unemployment report on Tuesday was worse than expected, which may have contributed to the British pound's decline during the day.

From a technical perspective, the downward trend on the hourly timeframe is unquestionable. This is not merely a trend; it is effectively a crash. However, this crash is unlikely to be long-lasting. Even last week, the decline in the pair did not always seem justified or commensurate with the news background that arrived on the currency market. Nevertheless, there are still no grounds to expect the downward trend to end. For that to happen, the British pound needs to surpass at least the critical Kijun-sen line.

On the 5-minute timeframe on Tuesday, two trading signals were generated. During the Asian trading session, the price first bounced off the critical line, allowing traders who were awake during the night to open short positions. In the American trading session, the area between 1.3369-1.3377 was reached, from which another bounce occurred. Therefore, short positions could be closed, and long positions opened.

GBP/USD 4H Analysis

On the 4-hour timeframe, the British pound is also within a downward trend following the breakdown of the upward structure last week. The price has literally fallen 300 pips, with the CHoCH line currently at 1.3653, but it may be adjusted lower as early as Wednesday. During last week's decline, several bearish FVGs can be identified, but we are focusing only on the most recent one. On Tuesday, the price completely filled this pattern and even received a reaction. However, the reaction was considerably weaker than for a similar pattern in the euro currency.

The decline in quotes may continue on Wednesday, but this will require overcoming the support area on the hourly timeframe. A "bullish" FVG has formed in the area of 1.3318-1.3345, which the price may also react to.

GBP/USD 1H Analysis

On the hourly timeframe, the GBP/USD pair has traded in only one direction—downward—over the past week. The macroeconomic and fundamental background remains little affected by the pair's movements, while geopolitics is pulling the British pound toward the "bottom" once again. However, we do not believe that without a real escalation in the Middle East, the dollar will continue to strengthen. On Monday, positive news from the White House prompted the dollar to fall by 100 pips immediately.

For May 20, we highlight the following key levels: 1.3096-1.3115, 1.3179-1.3187, 1.3369-1.3377, 1.3465-1.3480, 1.3588, 1.3671-1.3681, 1.3751-1.3763. The Senkou Span B line (1.3569) and the Kijun-sen line (1.3414) may also serve as sources of signals. It is recommended to set the Stop Loss to breakeven after the price moves in the right direction by 20 pips. The lines of the Ichimoku indicator may move throughout the day, which should be taken into account when determining trading signals.

On Wednesday, the UK is scheduled to release the April inflation report, which will be pivotal for the Bank of England's monetary policy at its next meeting. In the U.S., the formal FOMC minutes will be published.

Trading Recommendations:

Today, traders may open short positions targeting 1.3179-1.3187 upon consolidating below the 1.3369-1.3377 area. Long positions can be opened if there is a bounce from the area of 1.3369-1.3377 with a target of 1.3465-1.3480. On the 4-hour timeframe, a sell signal is expected to form in the bearish FVG at 1.3405-1.3432.

Explanations for the Illustrations:

• Price levels of support and resistance – thick red lines where the movement may end. These do not serve as sources of trading signals.
• Kijun-sen and Senkou Span B lines – Ichimoku indicator lines transferred from the 4-hour to the hourly timeframe. These are strong lines.
• Extremum levels – thin red lines where the price previously bounced. These serve as sources of trading signals.
• Yellow lines – trendlines, trend channels, and any other technical patterns.
• CHOCH – change of trend structure.
• Liquidity – Stop Loss, pending orders that market makers use to build their positions.
• FVG – Fair Value Gap. Price moves very quickly through these areas, indicating a complete absence of one side in the market. Subsequently, the price tends to return and react to such areas in continuation of the main trend.
• IFVG – Inverted Fair Value Gap. After returning to such an area, the price does not react to it; it breaks impulsively and then tests it from the other side.
• OB – Order Block. The candle on which a market maker opened a position with the aim of gathering liquidity to form their position in the opposite direction.

The EUR/USD currency pair resumed its downward movement on Tuesday after failing to overcome the 1.1657-1.1666 area or the critical Kijun-sen line. Therefore, from a technical standpoint, everything is proceeding as planned. Regarding other factors, the key issue remains geopolitics, which continues to exert pressure on risk assets and currencies. The problem is that an enormous amount of conflicting information comes in daily, yet the market no longer believes optimistic proclamations about the progress of negotiations or the imminent resolution of the conflict. No confirmed information has emerged regarding what the parties are currently negotiating, who is involved in the talks, and what concessions the participants are willing to make to satisfy the interests of all parties. Consequently, traders are left to guess. The movements of the EUR/USD pair over the past two weeks clearly indicate the market's positioning.

Technically, the downward trend persists, but if Iran and the U.S. resume negotiations this week, the dollar could drop as rapidly as it has risen. Regrettably, geopolitics is once again dictating much of the movements in the currency market.

On the 5-minute timeframe on Tuesday, two trading signals were generated. Earlier in the Asian trading session, the pair bounced off the 1.1657-1.1666 area, and in the European session, it reached the 1.1615-1.1626 target area. During the American session, another sell signal was generated by breaking through the 1.1615-1.1625 area. Thus, traders could open at least one trading position.

EUR/USD Analysis 4H

On the 4-hour timeframe, the situation in the ICT trading system was highly favorable for traders on Monday. On that day, the price managed to work through the nearest area of POI for sales — the "bearish" FVG of 1.1658-1.1667. Furthermore, during the night on Tuesday, a signal formed in this area, and throughout the day, the price declined. Thus, the signal worked perfectly.

On Tuesday, another bearish FVG was created, which can also be used as a POI. It's important to remember that in this area, a confirmation signal should form on the timeframe two levels below the current one, rather than simply the price reaching it.

EUR/USD Analysis 1H

On the hourly timeframe, the EUR/USD pair continues to form a new downward trend. The situation in the Middle East remains tense; it hasn't worsened, but negotiations have hit another deadlock, allowing the dollar to show moderate growth. In the near term, price movements will depend on geopolitical factors. If no new signs of escalation in the Middle East emerge, the dollar will begin to lose ground.

For May 20, we highlight the following trading levels: 1.1362, 1.1426, 1.1542, 1.1615-1.1625, 1.1657-1.1666, 1.1750-1.1760, 1.1786, 1.1830-1.1837, 1.1907-1.1922, as well as the Senkou Span B line (1.1736) and the Kijun-sen line (1.1658). It should be noted that the Ichimoku indicator lines can move throughout the day, which should be considered when determining trading signals. Don't forget to set a Stop Loss order to break even if the price moves in the right direction by 15 pips. This will protect against potential losses if the signal turns out to be false.

On Wednesday, the second estimate of April inflation for the Eurozone will be released, and the minutes from the last FOMC meeting will be published in the U.S. We consider both events to be relatively minor. Geopolitics will once again define market dynamics.

Trading Recommendations:

Today, traders may open new short positions targeting 1.1542 upon a price retracement from the area of 1.1615-1.1625. Long positions can be opened if the price consolidates above the 1.1615-1.1625 area, with a target of 1.1657-1.1666. On the 4-hour timeframe, a signal in the bearish FVG of 1.1628-1.1636 is required to open new short positions.

Explanations for the Illustrations:

• Price levels of support and resistance – thick red lines where the movement may end. These do not serve as sources of trading signals.
• Kijun-sen and Senkou Span B lines – Ichimoku indicator lines transferred from the 4-hour to the hourly timeframe. These are strong lines.
• Extremum levels – thin red lines where the price previously bounced. These serve as sources of trading signals.
• Yellow lines – trendlines, trend channels, and any other technical patterns.
• CHOCH – change of trend structure.
• Liquidity – Stop Loss, pending orders that market makers use to build their positions.
• FVG – Fair Value Gap. Price moves very quickly through these areas, indicating a complete absence of one side in the market. Subsequently, the price tends to return and react to such areas in continuation of the main trend.
• IFVG – Inverted Fair Value Gap. After returning to such an area, the price does not react to it; it breaks impulsively and then tests it from the other side.
• OB – Order Block. The candle on which a market maker opened a position with the aim of gathering liquidity to form their position in the opposite direction.

In the Australian Treasury's budget documents, the baseline scenario projects inflation falling to 2.5% by 2027, after peaking at 5% in mid-2026. This is based on expectations of declining oil prices.

However, according to worst-case scenario modeling conducted by the Treasury, inflation could exceed 7% if a prolonged war in the Middle East pushes oil prices above $200 per barrel in the third quarter.

In turn, such an outcome would lead to a decrease in real GDP growth rates by 0.5% over the next two financial years and an official unemployment rate of 5% in 2027-2028, with GDP growth not reaching pre-war levels even by 2030.

The minutes from the May Reserve Bank of Australia meeting indicate that eight out of nine board members supported raising the interest rate to 4.35%. This was primarily due to rising inflation risks associated with the conflict in the Persian Gulf. Currently, markets are pricing in a 75% probability of another rate hike in August, with the potential for further increases to 4.85%.

The minutes express growing concern among board members about inflation remaining high for an extended period. The RBA acknowledges that rate increases may not significantly affect short-term inflation, as its primary cause lies outside the bank's control and is linked to rising oil prices driven by supply constraints.

The RBA's own forecast assumes that the Strait of Hormuz will reopen soon. It is unclear why the RBA is so optimistic, as there is still no clear solution to the issue despite ongoing diplomatic negotiations. Since the meeting, little time has passed, and the rhetoric from RBA representatives has changed. RBA Deputy Governor Sarah Hunter noted that the impact of rising oil prices would be felt more quickly and strongly on consumer prices in Australia than in previous periods. She also acknowledged the existence of a negative scenario in which households reduce consumption, and businesses cut back on investments more than expected.

The RBA's mandate is to combat inflation, while the government focuses on ensuring economic growth. Both key financial authorities in Australia find themselves in a challenging situation. The only hope is for a swift resolution to the conflict in the Middle East; otherwise, the consequences for the country may be catastrophic.

The net long position in the Australian dollar (AUD) increased by $0.5 billion to $6.1 billion over the reporting week, indicating strongly bullish speculative sentiment. At the same time, the currency's calculated price is accelerating its decline, moving further from the long-term average.

A week earlier, we suggested that aggressive RBA rate hikes have their limits in supporting the Australian dollar, and a reversal is imminent. The movement began last week, and as of now, AUD/USD has lost over 40% of its gains since early April, suggesting the decline has further room to run. The nearest support is at the technical level of 0.7058, while we expect longer-term movements to 0.6940/60.

Silver (XAG/USD) remains under pressure, and at the time of writing, prices have fallen to $73.63. The white metal is retreating from its recent positions, which is associated with improved market sentiment regarding risks following U.S. President Donald Trump's statement about postponing immediate military intervention against Iran.

The decrease in geopolitical tension temporarily weakens demand for safe-haven assets. Donald Trump reported that negotiations with Iran are ongoing at the initiative of the leaders of the Gulf nations, but emphasized that the United States remains ready to initiate large-scale military actions if diplomatic efforts do not yield results.

Despite this relative easing of tensions, markets are still focused on the economic consequences of the conflict in the region. Disruptions in the Strait of Hormuz continue to support oil prices and heighten concerns about global inflation.

This situation reinforces expectations that the Federal Reserve may maintain a restrictive monetary policy for longer or even raise interest rates by the end of the year. According to the CME FedWatch tool, investors are increasing the probability of additional tightening measures later this year. At the same time, U.S. Treasury yields remain near recent highs, with the yield on benchmark 10-year bonds fluctuating around 4.60%.

The rise in yields increases the opportunity cost of holding non-yielding assets, such as silver. Additionally, the U.S. dollar continues to gain support due to expectations of tighter monetary policy, which diminishes the appeal of the metal to buyers.

From a technical perspective, the Relative Strength Index (RSI) has dropped below 50, indicating weakness among bulls. Prices have found support at $73.63. If this level fails to hold, the next support will be $72.00. The 20-day SMA represents a barrier; overcoming it would allow bulls to gain strength.

At the time of writing, the NZD/USD pair was trading around 0.5835, down 0.65% on Tuesday. The New Zealand dollar is once again under pressure from sellers against the U.S. dollar. Despite encouraging signals from negotiations between Washington and Tehran, the New Zealand currency fails to capitalize on improved market sentiment.

Markets are closely monitoring the latest statements from U.S. President Donald Trump, who said there is a "very good chance" of reaching an agreement with Iran and described recent progress in negotiations as positive. Trump also announced a suspension of immediate military actions, providing more space for diplomatic efforts while leaving the door open for large-scale intervention if an acceptable agreement is not reached.

Nevertheless, investors remain cautious about the long-term prospects for resolving tensions. Ongoing disagreements regarding Iran's nuclear program, as well as reports of explosions on the Iranian island of Kish, contribute to geopolitical uncertainty, which supports demand for the U.S. dollar.

At the same time, rising oil prices continue to stoke global inflation expectations and bolster assumptions regarding the Federal Reserve's shift to a more restrictive monetary policy. Markets are gradually reassessing their expectations regarding monetary easing this year, providing additional support to the U.S. dollar.

In New Zealand, producer-level inflation data may potentially support the New Zealand dollar. The Producer Price Index (PPI) for raw materials and inputs increased by 1.4% quarter-on-quarter in the first quarter, exceeding expectations of 0.8% after a drop of 0.5% in the previous quarter. The increase in inflationary pressure at the producer level may fuel speculation that the Reserve Bank of New Zealand (RBNZ) may shift to a more restrictive monetary policy. Investors are awaiting the release of the minutes from the Federal Open Market Committee (FOMC) meeting on Wednesday, which may provide insights into the future direction of U.S. interest rates.

From a technical standpoint, prices have fallen below the 200-day SMA, indicating weakness among bulls. The Relative Strength Index (RSI) is also negative, showing an increase in bearish sentiment in the market. Support is at 0.5815. If prices fail to hold this level, they may accelerate the decline towards April 13. If the 200-day SMA is overcome, the next obstacle will be the 100-day SMA.

The table below shows the percentage change in the New Zealand dollar against major currencies for Tuesday. The New Zealand dollar showed the greatest increase compared to the Australian dollar.

At the time of writing, West Texas Intermediate (WTI) crude oil is trading at $103.72, up 1.19% for the day and continuing an upward trend for four consecutive days. Markets continue to support prices, even amid signs of a temporary easing of tensions in the Middle East, as market participants remain interested in the "geopolitical risk premium" associated with potential supply disruptions.

However, the rise in crude oil prices may slow following U.S. President Donald Trump's announcement on Monday to suspend the planned military attack against Iran. This decision was made based on calls from the leaders of Qatar, Saudi Arabia, and the United Arab Emirates (UAE) for regional de-escalation.

Trump noted that serious negotiations are currently underway with Tehran, but also warned that the U.S. is prepared to launch a large-scale military operation if these talks fail. This stance continues to keep nervousness in the energy markets, as the recent escalation of tensions between Washington and Tehran has led to significant price increases.

Concerns regarding the Strait of Hormuz also provide support to the market. This strategically important waterway is a key route for global oil flows, while Iran's nuclear program and sanctions continue to pose serious obstacles to achieving a long-term agreement.

Regarding demand, India has announced an increase in gasoline and diesel prices by 87 and 91 paise per liter, respectively, in an attempt to offset losses caused by rising global oil prices. As India ranks as the third-largest oil importer in the world, investors are closely monitoring changes in demand in the country.

Bank analysts continue to highlight long-term risks of declining prices. Rabobank suggests that the growing fragmentation of the oil market could put pressure on prices in the future, especially following the UAE's exit from OPEC. Meanwhile, ING emphasizes that the market remains highly sensitive to news regarding Iran and global supply risks.

From a technical standpoint, the nearest target for oil is $105.00. If this level is surpassed, the next obstacle will be the range of $107.00-$107.20. Oil is trading above significant moving averages. Oscillators are positive, thus bulls have the advantage, with the path of least resistance being upward.

At the center of attention are geopolitics, the UK's political crisis, and key macroeconomic reports. These factors resemble the "swans, crabs, and pikes" that pull GBP/USD in opposite directions.

Let's start with the domestic political events in Britain. Against the backdrop of disappointing local election results for the ruling Labour Party, discussions about a potential change in party leadership (and, consequently, the Prime Minister), Keir Starmer, have intensified in the UK. The situation was further fueled by Andy Burnham's candidacy for a parliamentary by-election. The Mayor of Greater Manchester is considered one of the main contenders for the new party leader. Monday's YouGov poll results showed that 47% of Labour members prefer to see Burnham at the helm of the party. Market participants perceived this information as a threat to the stability of budgetary policy, after which the GBP/USD pair declined to the base of the 33rd figure.

The thing is, Burnham is associated with a more left-wing, "spending" approach to economic policy. He is seen as a politician who traditionally supports the expansion of government spending (especially in social and healthcare sectors), more active redistribution, and a less stringent adherence to fiscal constraints. Naturally, traders view such a course as a risk factor for increasing budget deficits, rising issuance of government debt, and heightened pressure on yields.

However, on Monday, Burnham publicly reassured the markets that, should he come to power, he would not reconsider the limits on government borrowing. According to him, the existing budget rules will remain in place, and defense spending will not exceed the established limits.

Such "soothing" rhetoric provoked strong volatility in the GBP/USD pair—within just a few hours, the price rose by more than 100 pips.

Additional support for buyers was provided by recent geopolitical events. On Monday, reports emerged that Washington was willing to discuss a temporary easing of sanctions as part of negotiations with Tehran. These reassuring rumors reduced geopolitical tensions, putting the dollar under pressure across markets. This included the pair with the pound, allowing GBP/USD buyers to test the 34th figure.

However, on Tuesday, the GBP/USD pair turned south amid a rather weak UK labor market report. The release was contradictory; however, traders interpreted it unequivocally as bearish for the British currency. This conclusion seems quite justified, as despite the mixed nature of the data, the "glass is half empty" in this case, not the other way around.

Thus, the official unemployment rate in the UK for the three-month period ending in March 2026 rose to 5.0%, after a decrease to 4.9% in the previous reporting period. Most analysts had expected the figure to remain the same.

A substantial decline in the number of employees on payrolls was also recorded (by almost 100,000). This is one of the largest drops in recent years (excluding the coronavirus crisis).

At the same time, the total number of job vacancies fell to 705,000 for the period from February to April of this year. This is the lowest level for this indicator in the past five years (since spring 2021). Compared to the previous three-month period, the figure decreased by 3.9%. Year over year, it dropped by as much as 7.1%. The decline in vacancies was observed in 11 of the 18 sectors of the economy, with retail trade being hit the hardest. It should be noted that this component of the report serves as a kind of "harbinger." That is, it is a leading indicator that businesses are factoring in the risks of stagnation and freezing new hiring.

The number of claims for unemployment benefits rose by 26,500 in April, following an increase of 4,900 in the previous month. This marks the strongest growth dynamics since 2023. In conjunction with the decline in employment and rising unemployment, this figure signals that the UK labor market is entering a gradual cooling phase.

The wage growth rate (excluding bonuses) slowed to 3.4%, the lowest level since 2020. Adjusted for inflation, this indicates actual stagnation in real incomes.

Thus, a contradictory fundamental background has formed for the GBP/USD pair. On the one hand, there are glimmers of hope regarding the resolution of the Middle Eastern conflict; on the other hand, there are dismal labor-market data from the UK. Buyers were unable to establish themselves within the 34th figure (indicating the unreliability of long positions), but considering short positions is only prudent when sellers manage to hold below the support level of 1.3380—at this price point, the average line of Bollinger Bands on the H4 timeframe coincides with the Tenkan-sen line. Despite the prevailing bearish sentiment on Tuesday in the GBP/USD pair, sellers have yet to overcome this barrier. If bears do manage to push below this level, the next target for the downward movement will be the 1.3310 mark (the lower boundary of the Kumo cloud on the D1 timeframe).

On Tuesday, the yield on 30-year and 10-year U.S. Treasury bonds continued to rise. At the time of writing, the yield on 30-year bonds reached 5.195%, while the yield on 10-year bonds was 4.683%. During the day, the yield on 30-year bonds peaked at 5.197%, the highest level since July 2007, indicating increased pressure on fixed-income markets.

This yield dynamic reflects a renewed concern that inflation may remain elevated for longer than previously anticipated. Rising energy prices, driven by the conflict surrounding Iran, are adding further upward pressure on inflation expectations, prompting investors to reassess the future direction of monetary policy. The recent increase in oil prices further intensifies speculation that the Federal Reserve's next move may not include a rate cut.

Additionally, market participants are demanding a higher "term premium" — an additional payment required to hold long-term debt securities. Concerns about the persistent budget deficit and the government's growing financing needs are additional factors putting pressure on investor sentiment toward long-term Treasury bonds.

A study conducted by Bank of America and presented by Reuters on Tuesday indicated that 62% of asset managers expect the yield on 30-year Treasury bonds to exceed 6% within the next year.

Market participants will also continue to closely monitor developments in the Middle East's geopolitical situation. A significant de-escalation of the conflict could lead to lower oil prices and a better inflation outlook, potentially boosting bond demand and exerting downward pressure on their yields. However, the uncertainty in negotiations with Iran continues to prompt investors to remain cautious.

The recent rise in Treasury yields is raising increasing concerns in broader financial markets. If the current trend continues, it could create additional challenges for the mortgage market, consumer credit conditions, and equity valuations.

On the lower timeframe, I can identify a classic three-wave upward corrective structure. After this structure was completed, a new downward trend segment began to form, which, logically, should be impulsive. If this assumption is correct, we are likely to see the development of a five-wave structure within wave C of a higher degree, with targets below the 1.1400 level. Is there informational justification for such a strong strengthening of the dollar? In my view, not at the moment. Monday showed that Tehran and Washington may return to the negotiating table, which would make further dollar strengthening unlikely.

The EUR/USD pair resumed its decline on Tuesday and had lost about 50 basis points by the start of the U.S. session. As we can see, the euro's rise on Monday was nothing more than a coincidence. Although Iran and the U.S. may return to negotiations soon and neither side is currently inclined toward escalation, the market still does not believe in a near-term ceasefire or the reopening of the Strait of Hormuz. The presumed wave 3 or C continues to develop and may complete around the 1.1578 level, which corresponds to the 61.8% Fibonacci retracement.

The news background on Tuesday did not suggest trouble for the euro. Although Donald Trump once again issued threats toward Iran, he also confirmed that new strikes are postponed for at least several days and possibly indefinitely. Trump stated that the UAE and Saudi Arabia asked him not to resume aggression against Iran, as they see a possibility of a deal in the near future. It is unclear how accurate this information is, given that Saudi leaders only on Monday reported preparing a retaliatory strike against Iran for drone attacks on one of their nuclear power plants. I believe Trump does not want to restart the war and is therefore delaying escalation as much as possible.

In the UK, the unemployment report for March was released today. Unemployment came in higher than expected, which triggered further declines in both the pound and the euro. Based on all of the above, the current news background is insufficient to complete the downward wave structure. Considering that this structure may represent a higher-degree wave C, the decline could continue below the 1.1400 level.

General Conclusions

Based on the EUR/USD analysis, I conclude that the instrument remains within a broader upward trend segment (lower chart), while in the shorter term it is in a corrective structure. The corrective a-b-c wave pattern appears to be completed. Therefore, wave 3 or C is currently developing, which may be part of a larger wave C. The full wave C (if the current wave count is correct) may complete much lower than the 1.1400 area. However, such a scenario would require strong geopolitical support. Otherwise, the downward wave structure may take the form of a-b-c and finish around 1.1578.

On the higher timeframe, an upward trend segment is visible, after which a corrective wave structure begins forming. In the near term, wave C is expected to develop with targets around 1.1352, which corresponds to the 38.2% Fibonacci level. After the completion of the A-B-C structure, a new long-term upward trend may begin.

Key principles of my analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often lead to changes.
2. If there is uncertainty in the market, it is better not to enter it.
3. There is no and cannot be 100% certainty in market direction. Always use Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

In the current situation, traders can only wait for the market's reaction to imbalance 13, which is the last bullish pattern within the current bullish impulse — or for its invalidation. If we view the pair's decline as a corrective pullback, it could very well end within imbalance 13. I would remind you that patterns alone do not provide entry opportunities. Signals must form on lower timeframes, such as a structural break or bullish patterns. In other words, signs of a reversal must appear. If they do not, then there is no signal. Therefore, at present, I am waiting for a reaction to imbalance 13. The euro's rise on Monday gave hope for a resumption of the bullish impulse, but by Tuesday the quotes had once again moved lower.

I cannot help but point out once again that all of the U.S. dollar's growth between January and March was driven solely by geopolitics. As soon as the United States and Iran agreed to a ceasefire, the bears immediately retreated, and for more than a month the bulls dominated the market. At the moment, the ceasefire is hanging by a thread, but negotiations have not completely stopped and the chances for peace remain. Unfortunately, traders themselves increasingly doubt a full resolution to the conflict and a comprehensive agreement between Iran and the United States. More precisely, a deal will probably eventually be signed. But "eventually" is not enough for the market. If, hypothetically, the agreement is signed a year from now, traders are unlikely to remain optimistic today and continue selling the U.S. dollar.

The broader technical picture remains relatively clear. The bullish advance remains intact, but it urgently requires support. Ideally, that support would come from geopolitics — Iran and the United States resuming negotiations and finally beginning to make concessions. Without a positive news background, it will be difficult for the euro to resume its upward movement.

The economic backdrop on Tuesday was practically nonexistent, as the only report — the ADP employment report — generated no market interest, while the main movement occurred before its release. Thus, it is reasonable to conclude that the market once again began pricing in a worse-case scenario in the Middle East, which explains the latest decline.

The bulls still have many reasons to remain active in 2026, and even the outbreak of war in the Middle East has not reduced their number. Structurally and globally, Trump's policies — which led to the dollar's substantial decline last year — have not changed. In the coming months, the U.S. currency may periodically strengthen amid investor flight from risk, but this factor requires continuous escalation of the Middle East conflict. I still do not believe in a sustained bearish trend for EUR/USD. The dollar has received temporary support from the market, but what fundamental factors would allow the bears to dominate in the long term?

Economic Calendar for the U.S. and the Eurozone:

• Germany – Producer Price Index (06:00 UTC)
• Eurozone – Consumer Price Index (09:00 UTC)
• U.S. – FOMC Minutes (18:00 UTC)

The May 20 economic calendar contains three secondary events. The impact of economic data on market sentiment on Wednesday is again expected to remain limited.

EUR/USD Forecast and Trading Tips:

In my opinion, the pair remains in the process of forming a bullish trend. The news background changed sharply three months ago, but the trend itself cannot yet be considered canceled or completed. Therefore, the bulls may well resume their advance in the near future if geopolitics does not continue undermining traders' confidence in a positive resolution to the conflict.

Traders previously had opportunities to open long positions based on signals from imbalance 12 as well as from the order block. The upward movement may resume toward the yearly highs from imbalance 13. However, in the coming days it will be important for the bulls to maintain control of the market. For uninterrupted euro growth, the Middle East conflict must move toward a stable peace, and occasional signs of de-escalation do appear from time to time — though still rarely. Bullish traders currently lack sufficient support for a new upward impulse. The zone for new buying opportunities is 1.1605–1.1649.

The situation surrounding the resolution of the Middle East conflict remains unresolved, and traders are uncertain about its future direction. Today it may favor the bulls; tomorrow it may favor the bears. This is exactly the kind of picture we have observed in recent weeks. At the moment, confidence in peace in the Middle East and in the lifting of the Strait of Hormuz blockade has fallen to minimal levels, but this factor has likely already been priced in by traders.

In my view, the trend remains bullish despite the pair's sharp declines this year. The ceasefire in the Middle East remains fragile, but it still exists. Of course, the market cannot indefinitely rely on information that lacks factual confirmation. The Strait of Hormuz remains under a dual blockade, and although Tehran and Washington set a course toward removing the blockade several weeks ago, there has been no result so far. The situation alternates between improving and deteriorating. Markets were filled with optimism for nearly a full month, but last week they received a harsh reminder of reality.

The technical picture currently looks as follows: bullish imbalance 18 generated a price reaction, so if not for bearish imbalance 19, I would already be preparing for a strong bullish advance. However, bearish imbalance 19 formed within a bullish trend, so I do not believe it should be used for opening short positions. The decline may continue only in the event of a sharp drop in UK inflation or genuinely significant and pessimistic geopolitical news regarding the Middle East conflict.

On Tuesday, the economic backdrop made every effort to push the pound back into a downward trend, but the bulls managed to hold their positions. UK unemployment unexpectedly increased, while faster wage growth suggests that UK inflation for April could come in above the forecasted 3%.

In the United States, the overall fundamental backdrop remains such that, in the long term, it is difficult to expect anything other than further dollar weakness. Even the conflict between Iran and the U.S. changes little in this regard. Geopolitics temporarily reminded markets of the dollar's safe-haven status for about two months, but overall the long-term outlook for the U.S. dollar remains difficult. The U.S. labor market continues to weaken, the economy is approaching recession, and unlike the ECB and the Bank of England, the Federal Reserve is not expected to tighten monetary policy in 2026. Across the United States, four major protest movements have already taken place personally against Donald Trump, while Jerome Powell's departure could further worsen the situation for the dollar if Kevin Warsh leads the FOMC toward a more dovish stance. From an economic standpoint, I see no basis for sustained dollar growth.

Economic Calendar for the U.S. and the UK:

• UK – Consumer Price Index (06:00 UTC)
• U.S. – FOMC Minutes (18:00 UTC)

The May 20 economic calendar contains two entries, with the UK inflation report standing out as the key event. The impact of economic data on market sentiment may persist throughout Wednesday.

GBP/USD Forecast and Trading Tips:

The long-term outlook for the pound remains bullish. The "Three Drives Pattern" warned traders about the beginning of the upward movement, and since then, three bullish patterns and three bullish signals have formed. Last week, geopolitics complicated the bulls' previously optimistic outlook, but they still have a chance to retain control within imbalance 18. I consider the target for the pound to be the 2026 high at 1.3867. I will only begin considering a bearish trend if imbalance 18 is invalidated. In that case, bearish patterns would come into play. Until that happens, I expect imbalance 19 to be invalidated and the upward movement to continue.

The test of the 1.3397 price level occurred when the MACD indicator had just started moving downward from the zero line, confirming a valid entry point for selling the pound. As a result, the pair declined by only 10 points.

The British pound showed a modest decline following disappointing macroeconomic data from the United Kingdom. News that the country's unemployment rate and the number of unemployed both increased beyond economists' forecasts triggered a mild sell-off in the British currency, though no panic emerged. All of this points to growing problems in the labor market, which could negatively affect consumer spending and overall economic growth.

The upcoming U.S. statistical reports in the second half of the day are unlikely to have a significant impact on the currency market. In particular, only data on changes in pending home sales in the United States is expected. In the case of strong statistics, the dollar may attempt another rise against the pound, but the main fundamental driver for market movement will likely come from remarks by Federal Open Market Committee member Christopher Waller.

As for the intraday strategy, I will mainly rely on implementing Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1:

Today, I plan to buy the pound when the entry point reaches the 1.3418 area (green line on the chart), with a target at 1.3454 (thicker green line on the chart). Around 1.3454, I plan to exit long positions and open short positions in the opposite direction, targeting a 30–35 point move from the level. Pound growth today can only be expected after weak U.S. data.

Important: Before buying, make sure that the MACD indicator is above the zero line and just beginning to rise from it.

Scenario No. 2:

I also plan to buy the pound today if there are two consecutive tests of the 1.3391 level while the MACD indicator is in oversold territory. This would limit the pair's downward potential and lead to a bullish market reversal. In this case, growth toward the opposite levels of 1.3418 and 1.3454 can be expected.

Sell Signal

Scenario No. 1:

I plan to sell the pound today after the price breaks below the 1.3391 level (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers will be the 1.3351 level, where I plan to exit short positions and immediately open long positions in the opposite direction, targeting a 20–25 point rebound from the level. Pressure on the pound will return today if strong U.S. data is released.

Important: Before selling, make sure that the MACD indicator is below the zero line and just beginning its downward movement.

Scenario No. 2:

I also plan to sell the pound today if there are two consecutive tests of the 1.3418 level while the MACD indicator is in overbought territory. This would limit the pair's upward potential and lead to a bearish market reversal. In this case, a decline toward the opposite levels of 1.3391 and 1.3351 can be expected.

What the Chart Shows

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated Take Profit level or an area to manually lock in profits, since further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – estimated Take Profit level or an area to manually lock in profits, since further decline below this level is unlikely;
• MACD Indicator – when entering the market, it is important to use overbought and oversold zones as guidance.

Important

Beginner Forex traders should make market entry decisions very carefully. Before the release of major fundamental reports, it is best to stay out of the market to avoid sharp price swings. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember: successful trading requires a clear trading plan, like the one presented above. Making spontaneous trading decisions based solely on the current market situation is inherently a losing strategy for an intraday trader.

The ETH/USD pair is trading around $2,112 under bearish pressure and reaching exhaustion levels, so a recovery in Ether is expected in the coming days, potentially reaching the 2/8 Murray line or slightly below it, near the top of the bearish trend channel at $2,220.

If bearish pressure on Ether continues in the coming hours, it is expected to reach the lower band of the downtrend channel again around $2,060. This level could be seen as a turning point for a strong technical rebound and could be considered a buy signal, with targets at $2,151 and $2,220.

If the downward pressure continues, Ethereum has strong support around the 0.8 Murray level, located at the psychological level of $2,000. This zone could offer an opportunity for bulls to take long positions. This would mean that the cryptocurrency would enter a phase of sustained recovery until reaching the 200 EMA around $2,261.

If, in the coming hours, ETH/USD consolidates above the 21 SMA at $2,151, we could consider this level as a buy point with targets at $2,220 and the 2/8 Murray line around $2,250.

The test of the 1.1634 price level occurred when the MACD indicator had just started moving downward from the zero line, confirming a valid entry point for selling the euro. As a result, the pair declined by 20 points.

It is clear that the short-term optimism generated by Mr. Trump's election promises turned out to be an illusion that faded under the pressure of geopolitical problems, resulting in euro selling during the first half of the day. The energy crisis and high inflation continue to pressure risk assets, leaving the euro vulnerable and reducing demand for it. Until these fundamental problems are resolved, it is difficult to expect significant growth in demand for the European currency.

Today, we will see data that may shed light on developments in the U.S. housing market, specifically the change in pending home sales. This indicator, often referred to as the Pending Home Sales Index, serves as a barometer of market sentiment and a leading indicator of future trends in the housing sector. A decrease or increase in this indicator may reflect weaker or stronger buyer activity, as well as the level of seller confidence in closing transactions quickly. Strong data could support further gains in the U.S. dollar.

As for the intraday strategy, I will mainly rely on implementing Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1:

Today, buying the euro is possible when the price reaches the 1.1634 area (green line on the chart), with a target at 1.1671. At 1.1671, I plan to exit long positions and also open short positions in the opposite direction, targeting a 30–35 point move from the entry level. Euro growth today can only be expected after weak U.S. data.

Important: Before buying, make sure that the MACD indicator is above the zero line and just beginning to rise from it.

Scenario No. 2:

I also plan to buy the euro today if there are two consecutive tests of the 1.1612 level while the MACD indicator is in oversold territory. This would limit the pair's downward potential and lead to a bullish market reversal. In this case, growth toward the opposite levels of 1.1634 and 1.1671 can be expected.

Sell Signal

Scenario No. 1:

I plan to sell the euro after the price reaches the 1.1612 level (red line on the chart). The target will be 1.1579, where I intend to exit the market and immediately open long positions in the opposite direction, targeting a 20–25 point rebound from the level. Pressure on the pair will return today if strong U.S. data is released.

Important: Before selling, make sure that the MACD indicator is below the zero line and just beginning its downward movement.

Scenario No. 2:

I also plan to sell the euro today if there are two consecutive tests of the 1.1634 level while the MACD indicator is in overbought territory. This would limit the pair's upward potential and lead to a bearish market reversal. In this case, a decline toward the opposite levels of 1.1612 and 1.1579 can be expected.

What the Chart Shows

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated Take Profit level or an area to manually lock in profits, since further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – estimated Take Profit level or an area to manually lock in profits, since further decline below this level is unlikely;
• MACD Indicator – when entering the market, it is important to use overbought and oversold zones as guidance.

Important

Beginner Forex traders should make market entry decisions very carefully. Before the release of major fundamental reports, it is best to stay out of the market to avoid sharp price swings. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember: successful trading requires a clear trading plan, like the one presented above. Making spontaneous trading decisions based solely on the current market situation is inherently a losing strategy for an intraday trader.

The British pound is trading around 1.3395, above the 21-day SMA, and has reached the top of the downtrend channel that has been forming since early May.

A H4 chart clearly shows that the British pound has failed to break out of the downtrend channel on several occasions and has been under downward pressure. However, it could be forming a pattern known as a pennant, and a decisive break above 1.34 could trigger a strong upward move, with the British pound potentially reaching the 200 EMA around 1.3481 and possibly even hitting the 7/8 Murray level around 1.3550.

Conversely, a drop below 1.3383 could continue the bearish scenario for the British pound, and we expect it to reach the 5/8 Murray level again around 1.3305.

The Eagle indicator is showing a positive signal, so it is more likely that the British pound will continue to rise in the coming days; therefore, we will look for opportunities to buy above 1.34 or sell if the price falls below 1.3380.

The optimism surrounding Trump's statements and the situation in the Middle East has apparently faded, bringing pressure back onto risk assets. Geopolitical tensions in the Middle East, despite the temporary calm, have not disappeared and continue to remain a smoldering risk capable of reigniting the conflict. Any escalation, even a minor one, could trigger panic in commodity markets, causing another spike in oil and gas prices, which would increase demand for the U.S. dollar and weaken risk-sensitive currencies.

In addition, attention will focus on upcoming economic data, which is unlikely to significantly influence broader market direction but is nevertheless scheduled for release. In particular, the U.S. Pending Home Sales report will be published. This indicator, as an important measure of housing market conditions, often serves as a barometer of consumer confidence and activity in the construction sector. The data is expected to reflect possible trends in supply and demand dynamics and may also influence interest rate expectations.

Additionally, Federal Open Market Committee (FOMC) member Christopher Waller is scheduled to speak later in the day. As one of the key decision-makers on U.S. monetary policy, his comments always attract heightened attention. Traders will closely analyze every word for hints regarding future Federal Reserve actions. However, given the recent changes within the Fed, it is unlikely that we will hear anything fundamentally new.

If the data proves strong, I will rely on the Momentum strategy. If the market shows little reaction to the data, I will continue using the Mean Reversion strategy.

Momentum Strategy (Breakout Trading) for the Second Half of the Day

For EUR/USD

• Buying on a breakout above 1.1635 may lead to euro growth toward 1.1673 and 1.1698;
• Selling on a breakout below 1.1610 may lead to euro weakness toward 1.1592 and 1.1569;

For GBP/USD

• Buying on a breakout above 1.3415 may lead to pound growth toward 1.3445 and 1.3473;
• Selling on a breakout below 1.3385 may lead to pound weakness toward 1.3350 and 1.3310;

For USD/JPY

• Buying on a breakout above 159.13 may lead to dollar growth toward 159.39 and 159.60;
• Selling on a breakout below 158.85 may lead to dollar selling toward 158.57 and 158.28;

Mean Reversion Strategy for the Second Half of the Day

For EUR/USD

• I will look for selling opportunities after a failed breakout above 1.1636 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.1604 followed by a return above this level;

For GBP/USD

• I will look for selling opportunities after a failed breakout above 1.3423 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3378 followed by a return above this level;

For AUD/USD

• I will look for selling opportunities after a failed breakout above 0.7139 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 0.7100 followed by a return above this level;

For USD/CAD

• I will look for selling opportunities after a failed breakout above 1.3779 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3744 followed by a return above this level.

Since reaching its high around 29,687, the Nasdaq 100 has been in a downtrend but may be approaching oversold levels. A technical rebound toward the 21-day SMA at 29,178 is likely in the coming days.

The NQ100 is currently within a downtrend channel, and a technical rebound could occur if it reaches the lower band of the downtrend channel; this could be seen as an opportunity to take long positions with a target of 29,000.

A consolidation above the 21 SMA could signal a recovery for the NASDAQ, and we could expect it to reach 29,687 and potentially even hit the psychological level of 30,000 points.

If bearish pressure prevails, a pullback toward 29,178 could be considered an opportunity to take short positions with medium-term targets around the 2/8 Murray line at 28,125, and ultimately, we could expect it to reach the 200 EMA around 27,486.

The Eagle indicator has reached oversold levels, so a technical rebound is likely to occur in the coming days.

The Dow Jones Industrial Average is trading around 49,592, rebounding after hitting the lower boundary of the uptrend channel that has been forming since early April. It shows upside potential, and we believe it could continue to rise in the coming days.

If, in the coming hours, the index consolidates above 49,698, this could be seen as a buying opportunity with targets around the psychological level of $50,000, and it could even reach the 50,781-point mark.

Conversely, if in the coming days the Dow Jones falls below 7/8Murray and, in turn, decisively breaks the uptrend channel and consolidates below the 200 EMA around 49,028, this could be considered a bearish scenario, and we could expect the DJ to test 48,437 points and could even reach the 6/8 Murray level around 47,656.

The Eagle indicator is showing a bullish scenario for the Dow Jones, but we should look for long positions if the price consolidates above 49,700.

The double top formation could be signaling a bearish move in the medium term, but this could only be confirmed if the Dow Jones breaks and consolidates below 49,000.

US president's visit to China disappoints investors

The outcome of the US president's trip to Beijing disappointed global markets. The summit produced no meaningful breakthroughs or new trade deals. At best, it highlighted persistent tensions and big structural differences between the world's two largest economies. For investors, who had been banking on a thaw in bilateral relations and lower trade barriers, the summit underscored the need to reprice geopolitical risk.

The absence of clear diplomatic progress increases uncertainty around international trade prospects and the stability of global supply chains. With a prolonged standoff, markets must now incorporate scenarios of sustained high import tariffs and continued tech restrictions—permanent background pressures on multinational companies exposed to Asian markets. Follow the link for more details.

Bitcoin hits two-week lows amid ETF outflows

Bitcoin came under heavy bearish pressure, sliding to two-week lows as global risk appetite deteriorated in response to changes in the US macro backdrop. At the same time, the market is registering significant outflows from spot crypto ETFs, removing a key source of liquidity that had supported prices in recent months.

Traders are increasingly skeptical about the near-term outlook for the crypto sector under tight monetary conditions. With institutional investors trimming their digital asset exposure, Bitcoin will struggle to find a new support level until rates and risk sentiment stabilize in traditional markets. Follow the link for more details.

Bond market sets records: Treasury yields boost USD, weigh on EUR

US Treasury yields have surged to multi-year highs, reshaping dynamics in the global FX market. The sharp move in fixed income reflects growing investor concern that the Federal Reserve may remain too passive in the face of inflationary pressure. Market participants fear that the Fed could allow the economy to overheat, which immediately translates into higher government yields.

The result has been a strong dollar rally against a basket of major currencies, with the euro among the main casualties. Follow the link for more details.

Inflation shock hits Dow Jones: markets pause ahead of corporate giant reports

Futures on the Dow Jones came under heavy selling pressure after unexpectedly high US consumer price data. The surprise print shattered hopes of an imminent easing in financial conditions, forcing bulls to step back. The index is now testing key support levels. Their breakout could trigger cascade selling and open the door to deeper market weakness.

In this turbulent macro environment, traders are shifting focus to corporate earnings as the next decisive factor. Reports from heavyweights such as Nvidia and Walmart will be the main volatility catalysts in the coming days. Their ability to sustain margins under rising input costs will determine whether equity markets can avoid a full-blown bearish trend. Follow the link for more details.

According to the Office for National Statistics, the UK labor market is cooling. Joblessness rose to 5.0% for the January–March 2026 period, above market expectations and up from 4.9% in February. In absolute terms the number of unemployed fell by 77,000 to 1.806 million—mainly reflecting a reduction in short-term unemployment—but on a year-on-year basis unemployment rose by 192,000 across all duration bands.

For context, unemployment was 4.4% at the start of 2025. Since then, it has climbed 0.6 percentage point—a slow but steady trend of labor market cooling that has intensified since the outbreak of war with Iran in late February 2026.

Annual regular pay growth for January–March 2026 stood at 3.4% excluding bonuses and 4.1% including bonuses. That is an important signal. Regular pay growth of 3.4% is the weakest since late 2020. Public sector wages continue to outpace private sector pay: public pay rose by about 5%, while private sector pay increased by 3.2%.

That is a critical point for the Bank of England. With consumer price inflation (CPI) at 3.8% year-on-year, 3.4% nominal pay growth implies a fall in real incomes. That gap is the bank's principal policy concern: inflation is rising while wages lag, risking a sharp contraction in consumer demand.

Yet the pound's decline was muted rather than dramatic. The reason is that the market recognizes the labor figures as only one factor, and not the dominant one. The primary driver of GBP/USD remains the Strait of Hormuz and developments in the Middle East.

Fundamentally, the United Kingdom is a net energy importer, which weighs on sterling: in March, immediately after the start of the Middle Eastern conflict and the closure of the Strait of Hormuz, GBP fell 1.9 percent. Hopes for a diplomatic resolution then triggered a reversal and pushed GBP/USD back above 1.3500. That reflects today's market hierarchy: labor market data are background noise; geopolitics send the main signal. That was confirmed yesterday, when President Trump announced the cancellation of a planned strike on Iran following calls from the leaders of Saudi Arabia, Qatar, and the UAE, prompting a sharp rise in demand for risk assets.

The upshot is clear: as long as the Strait of Hormuz remains closed, the UK economy will continue to suffer shocks; inflation will accelerate while depressing consumer demand and business activity; and now, on top of that, the labor market has started to show strain.

On Monday, Trump threatened Iran with retribution if it didn't hurry. On Tuesday, he postponed the allegedly planned strikes at the request of a three-country coalition — officially mediators, but in reality the states most at risk from any escalation. Tehran is targeting Saudi Arabia, the UAE and Qatar, damaging their energy infrastructure. So, it turns out everyone was scared of the US president's threats — except the principal adversary.

Markets initially rallied on news of supposedly ongoing talks, but within hours, everything returned to normal. The potential victims of escalation don't want fighting to resume. Iran is not afraid of the US and has no intention of opening the Strait of Hormuz. That means US inflation expectations will keep rising, nudging the Fed toward a cycle of monetary tightening. Great news for the dollar!

Inflation expectations dynamics in the US

The greenback holds very strong trump cards. Markets are increasingly convinced that geopolitical risks are more likely to intensify than to fade, which supports high demand for safe?haven assets. Rising oil prices benefit exporters — including the US. By contrast, the US's main rivals — the eurozone, Japan and the UK — import black gold. As a result, the US economy may slow, but it will look much better than its competitors.

Why hasn't EUR/USD plunged into the abyss or returned to parity as it did four years ago? The greenback owes its resilience to the US stock indices. According to Yardeni Research, the S&P 500 can continue its rise even in a stagflationary environment. The key is that companies keep making money. Their impressive corporate profits have helped the euro. But earnings season is ending, and investors are searching for new growth drivers — and not finding them.

A correction in US stocks could breathe new life into EUR/USD bears. Judging by the drop in futures on US stock indices, investors didn't buy Donald Trump's stories about positive progress in talks with Iran. That's what happens when someone too often passes wishful thinking off as fact.

Technically, a bearish engulfing bar may form on the daily EUR/USD chart, its body covering the previous bar's body. That would signal bear strength and support continued selling toward $1.154 and $1.144.

The UK labor market report offered no major surprises, except that average wage growth rose rather than fell as expected, reviving concerns about broader inflationary pressures.

Inflation now looks highly unpredictable. Prior to the attack on Iran, forecasts suggested inflation in April could fall to around 2% or lower; it is now clear that inflation will increase, potentially significantly. The Bank of England expects inflation of about 3.1% in Q2 2026 and 3.3% in Q3 2026, with a peak of 6% by year-end if the conflict is prolonged. The National Institute of Economic and Social Research (NIESR), using a multi-recurrent neural network (MRN) model, projects inflation to rise through March 2027, although its peak is slightly lower than the Bank of England's forecast.

The outlook for the UK economy hinges on the balance between rising inflation and slowing growth. Revised GDP data for Q1 surprised on the upside, showing growth of 2.6% year-on-year versus a preliminary estimate of 1%. Until recently, markets expected the Bank of England to deliver two further hikes this year, and possibly three under certain conditions. Strong economic momentum, supported by high PMI readings in April and May, gives the Bank scope to pursue a more aggressive tightening path if inflation continues to rise.

April inflation data is due on May 20. Consensus short-term forecasts for April are moderate and even below March readings. The pound's reaction to the release could be mixed:

- If inflation exceeds expectations, the probability of additional rate hikes will rise materially, likely prompting a significant sterling appreciation.

- If inflation is in line with or slightly below forecasts, markets are unlikely to react strongly.

A growth slowdown now appears almost inevitable. The IMF in April lowered its 2026 UK GDP forecast from 1.3% to 0.8%, citing gas import dependency and expectations of a less aggressive Bank of England. Accordingly, if April inflation accelerates, the Bank of England would have scope to raise rates as soon as June, rather than waiting for clear evidence of slowing activity; markets may interpret that possibility as bullish for sterling.

Net short positions on sterling narrowed by GBP 1.8 billion over the reporting week to -GBP 3.8 billion, but the implied price remains below the long-term average and is still biased toward further declines.

A week earlier the priority scenario was a decline in GBP/USD toward support at 1.3450–1.3470. The pound did plunge under pressure from escalation risk and failed to find support. The probability of a corrective rally is considered low; attempted rallies toward 1.3450–1.3470 are likely to prompt renewed selling. The revised downside target is the March low at 1.3157.

What is an "innovative exclusion" and why is it needed? The SEC intends to issue the exclusion for tokenized shares as part of a broader initiative it calls "Project Crypto." The exclusion could allow crypto platforms to offer on-chain trading of equities without full registration as a broker-dealer, under certain circumstances and for a limited experimental period.

In essence, this is about creating a parallel stock market on the blockchain — operating 24/7 and able to provide instantaneous settlement instead of the traditional two?day cycle.

Remember that tokenization of equities is mainstream this year. Tokenized shares are blockchain?based versions of securities that can trade around the clock and settle faster than traditional shares. Proponents say the concept can reduce settlement delays and make markets more globally accessible. Critics warn of liquidity fragmentation and investor protection risks. In any case, it is another step in the evolution of digital assets, which market participants will no doubt welcome.

Trading recommendations

Bitcoin

Buyers are currently targeting a return to $78,400, which would open a direct path to $80,100, and from there, the level of $81,700 is within reach — a break above which would signal attempts to resume a bull market. On the downside, buyers are expected around $76,500; a drop back below that area could quickly push BTC toward $74,700. The longer-term target would be the $73,100 area.

Ethereum

A clear close above $2,146 opens the direct road to $2,222. The longer-term target is the high around $2,291; surpassing that would indicate strengthening bullish sentiment and renewed buyer interest. On the downside, buyers are expected at $2,084; a fall back below that area could quickly push ETH toward $1,997. The longer-term target would be the $1,911 area.

What's on the chart

• The red lines represent support and resistance levels, where the price is expected to either pause or react sharply.
• The green line shows the 50-day moving average.
• The blue line is the 100-day moving average.
• The lime line is the 200-day moving average.

Price testing or crossing any of these moving averages often either halts movement or injects fresh momentum into the market.