Just one of two strong EUR/USD trends will endure, and the outcome will have great bearing on other major currencies as well as some influence on the entire FX market.

This year's 1.2084 high slightly exceeded the 1.2016 target for a minor correction of the downtrend from 1.6040 in 2008 to 0.9528 in 2022. However, this proved to be a false break, followed by the liquidation of the second-largest bullish wager on record, worth $27 billion.

Interestingly, though, the result of this sea change in positioning did not push the pair down too far. The drop to 1.1409 fell shy of the 1.1336 target for a minor correction, or 38.2% retracement, of the 1.0125–1.2084 rise seen between February 2025 and January 2026.

There has never been a close above the 200-month moving average, which was at 1.1940 when EUR/USD reached this year's high in January and has since fallen to 1.1898. Its closer proximity to EUR/USD's current level, along with the reduction in bullish positioning, heightens the chance of a break. However, EUR/USD has been trapped by the divergent pulls of stocks and oil.

While the surge in oil weighs on EUR/USD, the continuing boom in stocks is providing further support for the EUR/USD rally that has occurred alongside it.

At some stage, traders will take a decisive position, guided by oil, stocks, the conflict in the Middle East, and its implications for inflation and economic growth. This will result in either the resumption of a downtrend that has been refreshed by a correction and has the potential to run far below parity, or a bigger rally that, without the restraint of bullish wagers, could swiftly extend toward 1.28 and will probably reach 1.35.

There has been a recent bullish signal, with the 21-month moving average at 1.1302 rising above the 100-month moving average at 1.1237. The overbought conditions evident when the pair peaked in January have also been alleviated, with the top of the 20-month Bollinger Bands at 1.2358 allowing room for a larger rise.
Targets for resumption of the downtrend lie below parity

Targets for a bigger correction of the EUR/USD downtrend and key
techs


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• AI enthusiasm continues to lift stocks encouraging broader will to gamble

• EUR/USD close to peak of 1.0125-1.2084 rise unfolding alongside stocks

• Crude oil has risen $36 per barrel during Middle East conflict

• Higher oil prices weigh currencies of nations importing, support exporters

• Despite oil's rise EUR/USD little removed from its level before Iran war

• EUR/USD is stuck at the 1.1746 centre of 2026's 1.2084-1.1409 range

•
EURUSD


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Cable scales intra-day peak of 1.3536 on unexpectedly positive UK March GDP print; 0.3%

• 1.3531 was Asian session high (pre-GDP data). 1.3485 was May low on Wednesday

• Monday's high was 1.3653 - before UK political turmoil hurt the pound

• UK's Rayner cleared by tax authority, Guardian reports

• BoE's Breeden says rate hikes not needed in June or July, FT reports

• Fellow MPC member Mann says sterling and gilt moves are key for her rate decisions

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• USD/JPY abruptly slumped from a session high of 157.99 to 157.53 EBS

• Market nervous over possible Japan FX intervention, maybe another rate check

• Whatever the cause, USD/JPY bounced thereafter to 157.89

• Moves similar to what transpired on Tuesday when USD/JPY rose to 157.75

• Nervousness likely to persist, action seen likely at/above 158.00

• Japan's MOF seen out to punish speculation, rein in USD pre-June BOJ

• Related comments , , also
USD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• GBP/USD unchanged in Asia after closing 0.1% lower on Wednesday

• Weighed down by broad dollar strength and UK political turmoil

• Fed Dec rate hike bets rise on signs U.S. inflation becoming pervasive

• GBP and UK bonds stabilise as Starmer challenger fails to emerge

• Gloom in UK housing market shows no sign of lifting, RICS survey shows

• POLL-BoE to hold rates at 3.75% this year, but growing minority expect hike

• UK Q1 and March GDP, industrial and manufacturing output, and trade due Thu

• Support at 100-day MA at 1.3484, daily close below opens 1.3450-55, 1.3410

• Resistance 1.3550,1.3590-1.3600; Wed range 1.3485-1.3548, Asia 1.3505-1.3530
GBP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.1% Thur in subdued trading, markets focussed on U.S.-CN meeting

• Iran war, Taiwan, trade & business all topics for Trump/Xi discussion

• Senate approves next Fed Chair Warsh, just as U.S. inflation concerns spike

• AUD 0.7280-85 resistance zone is a major inflection point short term

• U.S. initial jobless claims (poll +205k), Apr retail sales due Thur

• Range Asia 0.7247-605, support 0.7100 0.6834, resistance 0.7283 0.7661
AUD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Australian gold stocks fall as much as 1.5% to their lowest level since May 8

• Gold prices slid on Wednesday as war-driven inflation worries weighed on expectations for interest rate cuts [GOL/]

• Gold miners Ramelius Resources , Northern Star Resources and Evolution Mining fall between 0.7% and 1.8%

• Sub-index down 4.6% so far this year

(Reporting by Keshav Singh Chundawat in Bengaluru)

• USD/JPY still relatively bid, Asia 157.70-86 EBS so far, yesterday 157.56-93

• Obvious risk of Japan FX intervention keeping it below 158.00 for now

• 158 seen new 160, Japan FX action eyed from around this level, above

• On hold around middle of 156.33-158.82 daily Ichimoku cloud, 100-DMA 157.40

• Rise in US yields post-PPI data, JGB-US Treasury short rate diffs wider

• Rate differential in 2s to @259 bps, in 10s still narrow at @187 bps

• Chunky option expiries to upside today, 158.00 $880 mln, 158.30-60 $2.8 bln

• To the downside, only large between 156.30-50 total $1.2 bln

• Market focused on Trump-Xi talks, whether they help break US-Iran impasse

• Related comments , , ,

• Also , on US PPI , on Trump-Xi

• US markets , , ,

• On Fed-speak , , Warsh confirmation
USD/JPY:


JGB-US Treasury 2-year interest rate differential:


JGB-US Treasury 10-year interest differential:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD +0.4% from Wed 0.72315 low despite DXY rising 0.2%

• U.S. Apr PPI spiked 1.4% m/m (poll +0.5%) as inflation concern mounts

• U.S. Senate approves Trump nominee Kevin Warsh as next Fed Chair

• U.S.-CN meeting in focus, trade & business expected to dominate agenda

• AUD flirting with 0.7283 resistance zone, but will be tough to break

• Overnight range 0.7233-72, support 0.7100 0.6834, resistance 0.7283 0.7661
AUD Hourly Bollinger Band & DYX Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

MUFG Research discusses the latest UK political developments and sees a scope for further GBP weakness in the near-term.

"The pound is the second worst performing G10 currency this week underlining the underperformance related to the upturn in political uncertainties. It was looking highly likely this time yesterday that PM Starmer was about to step down as prime minister but his refusal and his call-out to backbenchers for someone to challenge him has gone unanswered, suggesting, for now at least, that his tenure as PM can carry on," MUFG notes.

"This political turmoil is happening at the worst time given the upturn in global inflation risks due to the conflict in the Middle East and with this uncertainty set to persist and potentially get worse, a period of renewed pound underperformance is the obvious conclusion. We were already assuming EUR/GBP would drift higher to 0.8850 by year-end but if this uncertainty persists and we do see new leadership and a shift left in policy, higher levels through 0.9000 is possible," MUFG adds.

• GBP$ held slight loss in NorAm afternoon, -0.18% at 1.3511; NY range 1.3530-1.3485

• Hot US PPI data confirms Tuesday's CPI rise, UST yields continue their ascent

• Pair remains on backfoot amid stagnant Mideast peace view; UK political ructions

• UK fiscal concerns remain elevated while UK gilts hover by trend highs

• Risk mixed awaiting Mideast angst, Trump-China news; oil holds abv $100/bbl (CLc1)

• Next week's UK CPI/RPI/PPI in focus for degree of inflation rise, BoE ramifications

• GBP$ supt 1.3484 rising 100-DMA, 1.3448 daily low Apr 23, 1.3426 100-DMA

• Res 1.3549 Wednesday high, 1.3569 the 10-DMA, 1.3653 daily high May 11

Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

• NY opened near 1.1715 after EUR/USD traded 1.1742-1.1695 in Asia and Europe

• The pair fell early as USD, US yields rallied after US April PPI

• 1.1698 traded but the pair bounced as stocks, silver gained & USD/CNH dropped

• EUR/USD neared 1.1720 then sat near 1.1705 late on late day USD buying

• Wider US-German spreads , gold's drop helped weigh on EUR/USD

• Techs lean bearish; RSIs are falling and EUR/USD traded below the 10- & 21-DMAs

• May monthly inverted hammer, contracting 15-mo Bolli bands are concerns for bulls
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7245 after 0.7232 traded overnight, pair fell sharply in early NY

• Above estimate April PPI drove USD, US yields up; AUD/UD fell to 0.7237

• Buyers emerged however as yields turned lower & USD softened; USD/CNH fell to 6.7867

• Rallies in silver, copper & stocks as well as gold's bounce off its low helped lift AUD/USD

• The pair hit a 5-session high of 0.7272 then neared 0.7260 on some late day USD buying

• AUD/USD traded up +0.27% in NY's afternoon which had techs sending bullish signals

• Daily, monthly RSIs indicate upward momentum, pair holds above rising 10- & 21-DMAs

• Widening 20-month Bolli bands, hold above 61.8% fib of 0.8007-0.5910 are also bullish
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Morgan Stanley Research previews the UK monthly print on Thursday.

"We expect flat activity, following what looked like a sharp monthly acceleration in February. 1Q GDP data have been coming in stronger than what we estimate is consistent with survey indicators for three years now, and the BoE has also noted that the ONS might be producing non-seasonally adjusted data. With such data quality issues, we accept that the band of uncertainty around the central forecast is very wide," MS notes.

"In any case, we think a flat March print, paired perhaps with mild downside adjustments to the February data, result in 1Q GDP growth of 0.6%Q. We think growth will be boosted by capex and government spending, with less of a contribution from private consumption. We expect GDP to flatline in 2Q and thereafter," MS adds.

EUR/USD might extend its recent decline due to diverging economic indicators from the U.S. and the euro area, along with bearish technical signals. The euro zone's first-quarter GDP growth was dismal at just 0.1%, while March industrial output fell short of expectations, declining 2.1% year-on-year. In contrast, the U.S. reported a significant uptick in April producer prices, marking the largest gains in four years, alongside recent jobs data suggesting a resilient labor market.

This divergence in economic performance could lead market participants to expect the Fed to choose a more hawkish policy direction and the ECB to adopt a more dovish approach.

Such a scenario could widen the U.S.-German two-year yield spreads , enhancing the dollar's yield advantage over the euro and exerting further downward pressure on EUR/USD.

Technical indicators also support the bearish outlook, with both daily and monthly RSIs signaling downward momentum. EUR/USD has breached its 10- and 21-day moving averages, and the presence of an inverted monthly hammer candle for May, coupled with contracting 15-month Bollinger Bands, suggests that the recent rally from the 2025 yearly low may be nearing its conclusion.

The 1.1650-1.1700 support zone is now under threat and, if breached, a decline towards the 1.1400-1.1450 area could be anticipated.
deus


eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Bank of America Global Research maintains a bullish bias on the USD in the near-term, expressing this view via short GBP/USD and long USD/CAD positions.

"The DXY is unchanged year-to-date, and near-term USD upside risks look underpriced. Looking through the lens of strong US economic data (absolute and relative), US equity outperformance, risks of eventual Fed hikes, and relatively clean positioning on aggregate, it's striking to us how low USD sentiment appears," BofA notes.

"Clearly the market is more focused on the prospect of war resolution and expectations for a dovish Fed, and undoubtedly many entered the year in the bearish USD camp, much like we did. But in the near-term, we question how much lower this can take the USD, leaving the balance of risks pointing to the upside. We prefer to express this view via long positions vs. GBP (capturing political risks) and CAD (capturing over-priced BOC and USMCA risks)," BofA adds.

Sterling may remain under pressure in the near-term as a volatile cocktail of domestic political instability and surging UK, and global, inflationary and growth pressures weigh on the currency's outlook.

The pound extended its slide today, again dipping into the daily Ichimoku cloud—which spans 1.3514 to 1.3322—and briefly testing critical support at the rising 100-day moving average currently at 1.3484. The currency remains firmly on the backfoot as markets grapple with heightened uncertainty over Prime Minister Keir Starmer’s hold on power following a report that his health minister was readying his resignation to try to trigger a leadership contest.

The political turmoil is exacerbating UK fiscal concerns with long-term gilt yields climbing to their highest levels since 1998 as traders fear a regime change could usher in a fresh wave of unfunded spending.

A challenging global macro landscape is compounding the pain. Persistent Middle East tensions have kept oil prices elevated above $100/bbl, fueling global inflation fears that were recently validated by hotter-than-expected U.S. CPI data.

Looking ahead, technical resistance is pegged at the 10-day moving average of 1.3567, just above today's high of 1.3549. Recently, bulls have been unable to maintain a foothold above 1.3600.

On the downside, a sustained break below the 100-DMA at1.3483 could see sterling drift toward the cloud base at 1.3322.

Next week’s UK CPI and PPI data will be pivotal. Another upside surprise could stoke hawkish BoE expectations, threatening UK growth prospects and inviting further GBP/USD weakness that could open the way toward late-March lows below 1.32.
GBP$ Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Goldman Sachs Research discusses AUD/NZD outlook.

"AUD/NZD now stands at its highest levels in over a decade. We think this outperformance is justified, as it looks broadly consistent with relative terms of trade. AUD/NZD has seen asymmetric outperformance on days when oil prices rise, and we think this dynamic helps reveal investor sentiment and an expectation that the current environment is likely to remain supportive for AUD," GS notes.

"Positioning has also contributed to the rally in AUD/NZD, though it looks increasingly stretched. This raises the risk of reversal should the RBA's communications turn less hawkish, the domestic data disappoint, or the terms of trade backdrop become less supportive," GS adds.

JP Morgan Research discusses the scope of further JPY intervention by Japan's MoF.

"It is clear from recent developments that Japan’s currency  authorities view USD/JPY 160 as a line in the sand. Whether  additional intervention occurs will depend on how the market  evolves, but estimated intervention to date totals around JPY  9 trillion—below the JPY 15 trillion seen in 2024—suggest ing there is still room to intervene. As such, if USD/JPY rises to around 159–160 again, the likelihood of additional  intervention is high," JPM notes.

"The 160 level is, if anything, a politically determined  threshold. In June and July 2024, after USD/JPY had moved  into the 162 area, prominent LDP politicians commented that  the BOJ should raise rates to curb excessive yen weakness,  and the BOJ surprised the market by hiking. The BOJ’s rate  hike last December following the formation of the Takaichi  administration can be interpreted in a similar context. In  Japan, the MoF is responsible for FX policy, which makes the  latter more susceptible to a political overlay," JPM adds.

• Cable falls to 1.3494 as pound weakens on Times report about Wes Streeting

• Streeting is preparing to resign and is likely to mount Labour leadership challenge

• 1.3494 is the lowest level since April 30 (1.3455 was the low that day)

• Long-dated gilt yields rise in response to Times report about Streeting

• 1.3500 was GBP/USD low on Tuesday, as UK political turmoil hurt pound

• Warsh has big plans for the Fed, but results may take time

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• USD/JPY has edged higher from 157.56 to 157.89, on Wednesday, EBS data shows

• It continues to trade within the daily cloud that currently spans the 156.29-158.82 region

• It has broken above the kijun line, currently at 157.86, a close above would be bullish

• The kijun line is the midpoint of the last 26-day trading sessions

• Verbal warnings are unlikely to stop a USD/JPY recovery

• However, according to ex-BOJ chief Kuroda, the yen unlikely to fall below 160 per dollar

• 30-day log correlation between USD/JPY and EUR/JPY is above +0.5 (pairs moving in tandem)

Daily Chart


Correlation Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Soon-to-expire FX option expiries attract the most related FX hedging flows around the strikes

• DTCC data shows EUR 1.9 billion EUR/USD strikes at 1.1700-10 for Wed's 10-am New York cut - EUR/USD currently 1.1705

• Thursday shows a further 1.8 billion euros expiring 1.1700 and 3-billion 1.1665-80 and 2billion 1.1750-55

• There are plenty more strikes in the immediate vicinity expiring on Friday and throughout next week

• Related hedging flows are helping to keep EUR/USD spot volatility and ranges tamed of late

• Related comment - Sell the USD but don't throw the receipt
EUR/USD FX option strike expires between May 13-22


(Richard Pace is a Reuters market analyst. The views expressed are his own)

Copper's rally is becoming an increasingly important FX theme as investors price in stronger demand from electrification, grid upgrades, EVs and the AI/data-centre buildout. The metal is central to power transmission, cooling systems, wiring and renewable infrastructure, while mine supply remains slow to respond. That combination has lifted copper's strategic importance and could keep the currencies of major producers better supported.

The clearest FX beneficiaries are the Chilean peso and Peruvian sol. Chile and Peru are among the world's largest copper exporters, so higher prices can improve their trade balances, fiscal revenues and investor sentiment. The Australian dollar may also benefit, though its copper exposure is part of a broader commodity story that includes iron ore, coal and LNG. The Canadian dollar has a more indirect link through energy, metals and North American power infrastructure, while the Mexican peso and Brazilian real could also draw support from copper output and broader industrial commodity demand.

These currencies are relatively attractive to investors because most are freely floating or broadly market-determined, making them easier to trade than tightly managed FX regimes. Several also offer interest rates above comparable U.S. levels, particularly in Latin America, adding a potential carry incentive alongside the commodity story.
Copper


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Copper has risen almost $2500/ton in less than two months

• May's high at $14196/ton is close to Feb's $14527ton record peak

• Shortage of copper used for AI, EVs, grids and renewables

• Chile and Peru are world's largest exporters

• Peso and sol float freely and are supported by i/rates of 4.5 and 4.25%

• Indonesia, Australia, Brazil, Canada and Mexico also export copper

• Next target for copper is $14911/ton ($18122 is main target)

•
Copper


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)