• USD/JPY has risen from 158.70 to 159.17, on Tuesday, according to EBS data

• It is traded through the top of the daily cloud that currently spans 156.38–158.91

• A daily close above the cloud would add to the upside bias and put the focus on 160

• Trading persists above the 158.54 Fibo, a 61.8% retrace of the 160.72-155.00 "intervention" drop

• A simple call option can be used to capture an upswing, mitigate near-term intervention risks

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

Daily Chart


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

May 19 (Reuters) - The Australian dollar remains highly sensitive to swings in global risk sentiment, particularly those linked to tensions between the United States and Iran. From a technical standpoint, this volatility may be laying the groundwork for a more sustained move lower in AUD/USD.

On the weekly chart, AUD/USD is showing early signs of a head-and-shoulders formation, a classic reversal pattern that typically emerges after an uptrend and can signal a broader move lower.

The structure comprises four elements: a left shoulder, head, right shoulder and neckline. The left shoulder forms as price rallies and then retreats. The head develops when price pushes to a fresh high before pulling back again. The right shoulder is formed if the market rallies once more but fails to surpass the high of the head, creating a lower peak broadly comparable to the left shoulder. The neckline is drawn by connecting the two reaction lows between the shoulders and the head, and it may slope higher, lower, or remain flat.

In AUD/USD, the left shoulder appears to be in place, while the head is still developing. So far, the formation spans roughly 18 weeks of price action, which implies that, if the pattern does complete, it is likely to do so over an extended timeframe rather than quickly. Confirmation would only come if price later breaks and closes below the neckline, at which point a measured downside target could be derived from the height of the pattern.
AUD/USD weekly chart:


(Peter Stoneham is a Reuters market analyst. The views expressed are his own. Editing by Louise Heavens)

• Fin Min Katayama: Japan ready to act on FX volatility, mindful of US bond market impact

• However verbal warnings are unlikely to stop the USD/JPY recovery

• USD/JPY traded above Monday's 156.38–158.91 cloud but failed to close beyond it

• However last Friday saw spot close above the 158.54 Fibo, keeping the bias on the upside

• 158.54 Fibo is a 61.8% retrace of the 160.72 to 155.00 intervention induced (EBS) drop

• A daily close above the cloud top, on Tuesday, would strengthen the bullish outlook

• 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)

• AUD/USD falls to 0.7125 as Nikkei's fourth consecutive down-day weighs on AUD

• Australian dollar is risk-sensitive. 0.7125 is 6.9 pips above Monday's May low

• 0.7177 was Asian session high (0.7183 was Monday's high)

• RBA saw space to assess impact of Gulf conflict after May rate hike

• Hunter says RBA worried higher energy costs could quickly lift consumer prices

• Australian April employment data due Thursday; +15k f/c. Jobless rate f/c 4.3%

AUDUSD


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

• Cable eyes 1.3400 (Asia low) after data shows jobless rate rose to 5% in March

• 4.9% print was expected. UK employers cut hiring and post fewer jobs in April

• 1.3449 was Monday high, after Burnham guidance spurred GBP short-covering

• Burnham committed to UK fiscal rules if he becomes PM. Monday low was 1.3304

• UK April inflation data due on Wednesday, at 0600 GMT; CPI expected at 3%

• Warsh to be sworn in as Fed chair at White House on Friday

GBPUSD


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

• AUD/USD -0.35% Tue after RBA fuels uncertainty on OCR pathway

• RBA's Hunter sees inflationary impacts of Iran war being passed on quickly

• May meeting minutes show RBA sees breathing space before next move needed

• Iran tables fresh peace proposal, Trump says 'very good chance' of deal

• AUD bears target 0.7100 support, break below would materially open downside

• AU Apr employment update Thur, Reuters poll: +17.5k jobs, 4.3% unemployment

• Range Asia 0.7136-774, 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.)

• GBP/USD down 0.15% in Asia after closing 0.83% higher Mon on profit-taking

• Capped by elevated oil prices and Treasury yields on Iran war uncertainty

• WTI crude hovers near a 2-week high, U.S. 10-yr yield holds near 1-year high

• Trump signals Iran nuclear deal may be possible, markets remain skeptical

• GBP rally from 5-week low on Mon corrective as UK political concerns persist

• UK jobs data Tue, inflation data Wed seen as key for BoE rate expectations

• Former lows at 1.3450-60 is now strong resistance; more at 1.3480, 1.3500

• Support 1.3380, 1.3350, 1.3300; ranges Mon 1.3304-1.3449, Asia 1.3412-1.3435
GBP:

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

• AUD/USD -0.4% Tue, meeting minutes show RBA thinks OCR slightly restrictive

• RBA sees breathing space to see how economy reacts Iran war developments

• RBA's Hunter expects oil price inflation to be passed through quickly

• Iran tables fresh peace proposal, Trump says 'very good chance' of deal

• DXY recovers 0.1% in Asia post-overnight losses prompted by peace hopes

• AUD bears targeting 0.7100 support, break below would expediate downswing

• AU Apr employment update Thur, Reuters poll: +17.5k jobs, 4.3% unemployment

• Range Asia 0.7140-774, support 0.7100 0.6834, resistance 0.7283 0.7661
AUD Daily 55-DMA


DXY Daily 55-DMA

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

• USD/THB opens lower, tracks dip in USD and UST yields

• Bounce in gold prices further boosted THB gains overnight

• DXY backs off 99.41 high yesterday to 98.94 low in NY, last at 99.06

• Trump says he paused attack on Iran as negotiations continue

• USD/THB traded 32.47-32.71 range in NY, closed at 32.51

• Supports at 32.40, 32.30; resistance at 32.70, 32.80 intraday

• 2yr UST yield last at 4.05%, 10yr last 4.59%

• Stocks mostly lower on profit taking in tech shares

• Related
THB

(Catherine Tan is a Reuters market analyst. The views expressed are her own.)

• USD/JPY remains bid at recent highs, Asia today 158.79-84 EBS

• Follows blip up yesterday to 159.08, highest since 160.72 April 30

• April 30 when MOF began interventions, another round May 6 from 157.93

• MOF in quandary? To intervene or not to intervene

• Latest USD/JPY rise on broad USD strength, little MOF can really do?

• Latest USD/JPY rise met with only jaw-boning so far, action soon?

• Spot holding for now near top of 156.37-158.91 daily Ichimoku cloud

• Still ascending hourly cloud 158.06-63 below, 100-HMA 158.29

• In option expiries, nothing major nearby today, some 158.00-10, 159.00

• Massive below however with $1.3 bln 157.35-50, $3 bln 156.95-157.00

• JGB-US Treasury 2-year rate differentials wider still to @268 bps

• Differential in 10s holding near recent lows, narrows, NY close @187 bps

• Related comments , , ,

• Also , on Japan jaw-boning/action ,

• US markets , , ,

• On Fed , , US economy ,
USD/JPY:


JGB-US Treasury 2-year interest rate differential:

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

• NZD/USD +0.9% from Mon 0.5824 low, rejects extension below 200-DMA

• NZ Apr electronic card retail sales -1.3% m/m (prior +0.7%), +2.0% y/y

• NZ Q1 PPI: inputs +1.4% q/q, outputs +0.8% q/q

• Futures pricing implies 71.2% probability of no RBNZ change May 27

• USD index & UST yields softer after Trump pauses Iran attack

• Iran sends new peace proposal, Trump says 'very good chance' of deal

• Range NZ 0.58594-805, support 0.5815 0.5680, resistance 0.5991 0.6012
NZD Daily 200-DMA


DXY Daily 55-DMA

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

• AUD/USD +0.7% from Mon 0.71181 low as DXY & UST yields retreat slightly

• RBA Assistant Governor Hunter speaks Tue on inflation & Middle East war

• RBA's May monetary policy meeting minutes scheduled for 0130 GMT release

• Iran sends new peace proposal, Trump claims to have paused planned attack

• AUD 0.7100 support the key inflection point short term, pair remains soft

• AU Apr employment update Thur, Reuters poll: +17.5k jobs, 4.3% unemployment

• Overnight range 0.7143-839, support 0.7100 0.6834, resistance 0.7283 0.7661
AUD Daily 55-DMA


DXY Daily 55-DMA

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

MUFG Research maintains a neutral bias on USD/CAD in the near-term.

"The CAD has weakened against the USD over the past week, after USD/CAD failed to break below the lower end of the 1.3500–1.3900 trading range that has persisted for most of this year. The USD has been supported both by the lack of progress in negotiations between Iran and the U.S. to end the conflict and reopen the Strait of Hormuz, and by a recent run of upside U.S. economic data surprises that has prompted a more hawkish repricing of Fed rate expectations," MUFG notes.

"Our short-term valuation model for USD/CAD incorporating oil prices, yield differentials, and equity market performance, suggests that fundamentals are currently unlikely to drive a breakout from the current 1.3500–1.3900 trading range in the near term," MUFG adds.

• GBP$ firm in NorAm afternoon trade, +0.72% at 1.3420; NY rane 1.3450-1.3348

• Today's rise likely position squaring ahead pre-data which may hint at hawkish BoE

• Risk selectively higher amid softer US-Iran outlook; equities up, UST yields a tad higher

• UK data includes labor data Tuesday, UK CPI/PPI Wednesday; will inform on BoE policy

• UK fiscal concerns remain elevated w/10-yr gilt yields near 5.10%, politics also a drag

• GBP$ res 1.3450 Monday high, 1.3481- 50% of 1.3658-1.3304, 1.3500 psychological lvl

• Supt 1.3392 rising 10-HMA, 1.3339 daily cloud base, 1.3304 Monday Asia session low

GBP Chart:


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

• NY opened near 1.1625 after 1.1608 traded overnight, rally extended in NY

• 1.1657 hit early NY as USD, US yields , oil

traded downward

• USD/CNH drop toward 6.7980, gains in gold, silver also helped the pair rally

• Yields, USD & oil then firmed, EUR/USD slid to 1.1634 then neared 1.1650 late

• EUR/USD was up +0.20% late in the day & daily techs flashed warnings to bears

• RSI diverged on the 1-1/2-month low & EUR/UDS pierced the 55-DMA
eurusd


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

• NY opened near 0.7150 after 0.7118 traded overnight, rally extended in early NY

• USD, US yields, oil & USD/CNH traded downward in early NY, AUD/USD then hit 0.7184

• Rallies in gold, silver & stocks bounce off its early lows helped prop up AUD/USD

• The pair then dipped as USD, yield, oil firmed while stocks turned lower

• 0.7155 traded, the pair then neared 0.7165 late; AUD/USD was up +0.20% late in the day

• Daily RSI diverged on today's low & a daily doji formed, they might be concerns for bears

• Falling monthly RSI, monthly inverted hammer candle give AUD/USD bears comfort
audusd


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

Barclays Research sees a scope for a sizeable USD rally this week.

Here and now, it appears conditions for risk and bonds are deteriorating, and conditions for the dollar rally to extend this week are ripe. 

"First, one of the proximate reasons for the dollar's recent underperformance is losing momentum. This is none other than the performance of semiconductor stocks, which are also one of the key indicators for broader equity momentum and appear to be a lot more range- bound over the past few days. To a non-trivial degree, the strong performance of risky assets has kept the dollar at bay despite data strength and high oil prices," Barclays notes.

"Second, the situation in the Middle East is not mending itself as one (including ourselves) would have assumed a month or so ago. Since the breakdown of the Pakistan talks, both sides have persisted on maximalist demands, with the most recent Iranian set of proposals quite far from something that even a more pragmatic US approach could accommodate. Oil prices have not increased due to the large initial stock of inventories and heavy draw-downs. Clearly, though, signs that the Hormuz strait will stay clogged for longer can only exert upward pressure on oil," Barclays adds. 

EUR/USD is likely to face renewed downward pressure amid prevailing economic and geopolitical factors.

After rebounding from a 1-1/2-month low on Monday, the pair has sparked some bullish sentiment among investors. However, this enthusiasm may be short-lived due to expectations regarding Federal Reserve policy, ongoing tensions with Iran and existing interest rate differentials.

SOFR futures prices rose during Monday's session but have exhibit a downward trend since mid-April, reflecting market anticipation of a hawkish Fed, which rates markets indicate could raise rates in early 2027 .

This shift has helped send the U.S.-German 2-year yield spread to its widest level since March 5, enhancing the dollar's appeal over the euro. Should the Fed's interest rate trajectory become hawkish it would likely trump and bulllish policy influence from the European Central Bank, which could exert downward pressure on EUR/USD.

Moreover, lingering tensions between the U.S. and Iran continue to buoy oil and commodity prices, adversely impacting the European economy. Should these prices remain elevated, the euro may struggle to gain upward traction.

Technically, the pair remains below its 200-day moving average, with the monthly RSI indicating a bearish trend and an inverted hammer pattern signaling potential weakness.

Unless the dollar's yield advantage diminishes or geopolitical tensions ease, the likelihood of EUR/USD trading lower remains.
deus


srah


eurusd


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

Credit Agricole CIB Research summarizes the latest reading of its positioning model.

"The AUD remains the biggest long in the G10 FX at present and saw some buying interest last week, predominantly driven by IMM flows. Our FX flow data points at banks and hedge funds inflows as well as corporates and real money investors outflows," CACIB notes.

"The NZD cemented its status as the biggest short in the G10 FX space and experienced fresh selling interest last week, predominantly driven by IMM flows. Our FX flow data points at real money investors inflows as well as banks, corporates and hedge funds outflows," CACIB adds.

Sterling is expected to face continued near-term volatility as macro anxieties limit the upside of Monday's technical rebound. The currency managed a lofty bounce off its Asia session low of 1.3304, a floor established amid heightened U.S.-Iran conflict tensions. This corrective move higher has lifted GBP/USD back within the daily Bollinger envelope and the daily Ichimoku cloud, which currently spans 1.3487–1.3339.

However, this recovery may turn out to be a transitory relief rally due to sterling-specific and global macro conditions. On the UK front, lingering political uncertainties persist. Wednesday's UK inflation data is expected to indicate rising prices, likely keeping the Bank of England on a more hawkish path that will further tamp down economic growth. Politically, the specter of a potential tax-and-spend Labour replacement for PM Keir Starmer, alongside former Health Secretary Wes Streeting’s talk of rejoining the EU, threatens to inject additional uncertainty into UK governance. This backdrop could prompt the international investing community to avoid UK assets, further exacerbating the country’s fiscal position.

For now, sterling bulls are pushing higher, regaining 1.3400 in early North American trading. Looking at the technical daily levels for May 18, immediate resistance is capped by Friday’s 1.3408 high, with tougher upside barriers looming at the 200-DMA at 1.3426 and the Ichimoku cloud top at 1.3487. On the downside, solid support aligns at the daily cloud base by 1.3339, and anchored near today's low at 1.3304 and natural big-figure support by 1.3300.
Sterling Chart:


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

Nomura Research adopts a cautious bias on USD/JPY and likes long CHF/JPY position instead.

"At the G7 Finance Ministers and Central Bank Governors Meeting on 18-19 May, with the focus on Treasury Secretary Bessent’s stance on Japan’s currency and monetary policy . It is currently unconfirmed whether Governor Ueda will attend, but as global bond yields come under upward pressure, market attention is likely to increase if a meeting between Treasury Secretary Bessent and Governor Ueda is arranged. If BOJ board member Koeda signals a positive stance toward a June rate hike in her speech on Thursday, it might provide some support to JPY,  because of the view that a majority support a June hike at the moment," Nomura notes.

"Unless there is a clear improvement in the Middle East situation, the main scenario for USD/JPY is to remain elevated, though caution is warranted regarding sporadic risks of a sharp JPY surge. We will avoid trading USD/JPY for now, recommending CHF/JPY long positions," Nomura adds.

JP Morgan Research maintain a bearish outlook for the JPY targeting USD/JPY at 164 by year-end.

"The BoJ data suggest that yen-buying intervention on April 30 amounted to about JPY 4 trillion. In the following several business days, as markets thinned out during Japan's holiday season, there were moves on May 1, 4, and 6 that raised suspicions of intervention. In fact, the BoJ data suggest that yen-buying intervention totalling JPY 4-5 trillion may have been conducted over this period," JPM notes.

"That said, as our mid-term JPY-bearish view was based on the assumption that intervention would be conducted before USD/JPY reached its cycle high of 162, the recent intervention does not change our view. Therefore, we keep USD/JPY targets unchanged at 158 for 2Q26, 160 for 3Q26 and 164 for 4Q26," JPM adds.

• USD buying, firm US yields sent EUR/USD down to a 1-1/2-month low overnight

• Oil gains & USD/CNH's rally to 6.8216 added weight, EUR/USD fell to 1.1608

• Buyers emerged however as USD selling took hold in Europe's morning

• USD came under further bear pressure due to gold, silver rallies & stocks bounce of the lows

• EUR/USD hit 1.1646 then neared 1.1630 in early NY, pair was up +0.05% in early action

• Daily RSI diverged on the low, daily doji formed, those could be warnings for EUR/USD bears
eurusd


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

• AUD/USD hit a 12-session low overnight on USD buying, US yield gains

• Higher oil prices also weighed; the pair hit 0.7118, buyers then emerged

• USD selling took hold while gold, silver turned up & stocks bounced; fhelped uel the lift

• USD/CNH drop from 6.8216 toward 6.7975 helped added buoyancy to AUD/USD

• The pair turned positive, hit 0.7165, NY opened near 0.7155, pair was up +0.08%

• Daily techs warn bears for now; RSI diverged on the low, daily bull hammer formed

• Monthly techs lean bearish; RSI is falling, monthly inverted hammer in place
audusd


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