• 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)

May 18 (Reuters) - Sterling came under heavy pressure on Friday as rising political uncertainty in Britain undermined sentiment, with the selloff generating important bearish signals on the weekly GBP/USD chart. Prime Minister Keir Starmer is facing mounting pressure after the resignation of a key political rival and signs that other figures within his party are positioning themselves to challenge his leadership. The political backdrop has added to investor unease at a time when British assets are already under strain.

That pressure has been evident in the rates market. British borrowing costs have climbed sharply, with 10-year gilt yields rising to their highest level since 2008, while gilts recorded their steepest decline since April 2025.

Against that backdrop, sterling fell 2% against the dollar last week after peaking at 1.3653, just below April's 1.3658 high. The reversal ended a five-week rally and shifted the near-term technical picture more decisively in favour of the bears.

The scale of the move was particularly significant because it produced a key weekly reversal. GBP/USD pushed above the previous week's high early in the week, but upside momentum faded, sellers regained control and the pair closed below the prior week's close. That pattern points to a loss of bullish momentum and raises the risk that a broader correction is now underway.

The decline also pushed GBP/USD back into its weekly Ichimoku cloud after the pair had broken above it in mid-April. That return into the cloud adds a further bearish technical signal. Unless sterling can re-establish itself above the cloud on a weekly closing basis, the deterioration in the medium-term outlook could deepen.

The immediate levels to watch are support at 1.3304, the early Monday low, and resistance at 1.3432, the 50-week moving average. From a broader technical perspective, the risk is that GBP/USD retraces the full 1.3160-1.3658 rally recorded between March 31 and May 1.
GBP/USD weekly chart:


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

• USD/JPY has climbed on Monday, has seen a 158.64-159.08 range on the EBS

• It has broken the top of the daily cloud, which currently spans the 156.38-158.91 region

• If there is a daily close above the cloud top, that would be a very bullish development

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

• However, the market remains nervous due to lingering direct intervention risks

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

• Japan's extra budget to include funding from fresh debt, Reuters source says

Correlation Chart


Daily Chart


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

• Thin, late Tokyo trading saw USD/JPY pop to 159.09 EBS before pulling back

• Market obviously wary of renewed Japanese FX intervention

• Two-way option gamma trades related to $5.7 bln 159.00 expiries today too

• Japan's MOF likely closely watching FX but hands tied on strong USD?

• Related comments , , also ,
USD/JPY hourly:

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

• Rising oil weighs euro as ccy of an importer and supports USD

• EUR/USD traders added to bets on euro rising in week to May 15

• Longs grew to $5.9 billion equivalent from $4.7 billion

• Oil rises to $111 per barrel on May 18

• Crude oil has increased by $41 pb during Middle East conflict

•
EURUSD


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

• Shares of Challenger Gold fall as much as 3.7% to A$0.13, their lowest level since May 7

• Gold miner receives binding commitments for an A$85 million ($60.63 million) placement

• Issue price of A$0.12 per share represents a discount of 7.7% to stock's last close

• Funds raised through placement will be used for a resource growth drilling campaign aimed at testing broader Hualilan tenement package and others

• About 11.8 million shares traded so far, 3.5x the 30-day avg

• Down 16.1% YTD, including the session's moves

($1 = 1.4019 Australian dollars)
(Reporting by Anjali Singh in Bengaluru)

• GBP/USD down 0.1% in Asia after closing 0.55% lower Friday

• Undermined by broadly higher USD which targets 100.64, 2026 high

• Risk aversion, UK political and fiscal concerns take a toll on GBP

• Elevated oil prices, rising global yields, falling stocks weigh

• WTI crude up 2.15% as UAE and Saudi Arabia report drone incidents

• U.S. 10-yr yield jumps to 15-month high, S&P E-Mini down 0.7%

• UK Mar unemployment, Apr inflation, May PMIs, Apr retail sales due this week

• Will stand in any contest to replace Starmer- former UK minister Streeting

• Starmer set to approve $24 bln increase in UK defence spending-The Times

• UK asking prices show bigger-than-usual rise in May, Rightmove says

• Support 1.3285-90, 1.3250, 1.32 10-15, resistance 1.3350-60, 1.3390-1.3400

• Friday range 1.3315-1.34075, Asia range 1.3304-1.3330
GBP:

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

• AUD/USD -0.3% Mon as CN economic updates miss expectations dramatically

• CN Apr y/y industrial output 4.1% (poll 5.9%), retail sales 0.2% (poll 2.0%)

• AUD pushing hourly lower Bollinger band, still soft but momentum slowing

• Rising potential for Fed hikes underpins USD and UST yields strength

• Drone attack on UAE nuclear power plant pushes Brent crude +1.9%, WTI +2.2%

• RBA's Hunter speaks Tue ahead May monetary policy meeting minutes release

• AU Apr employment update Thur, Reuters poll: +20k jobs, 4.3% unemployment

• Range Asia 0.71181-526, support 0.7100 0.6834, resistance 0.7283 0.7661
AUD Hourly Bollinger Study & DXY Daily 55-DMA

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

• Australian gold stocks fall as much as 3.9%, hitting their biggest intraday pct drop since April 30

• Sub-index touches lowest level since May 6

• Benchmark S&P/ASX 200 down 1.2%

• Index falls reflecting drop in bullion prices amid ongoing inflation concerns following the Middle East conflict

• Gold miner Evolution Mining tumbles 4.6% and Northern Star Resources slips 4.1%

• YTDD, AXGD down nearly 12%, AXJO declines 2.1%
(Reporting by Aamir Sheik Khalid in Bengaluru)

• EUR/JPY 184.20-82 EBS Friday, Asia indicated at 184.51 so far, inside day

• Tad broader 183.50-185.41 range since May 7, essentially sideways

• Cross looks to be re-entering daily Ichimoku cloud between 183.83-184.64

• Flattening 100-DMA 184.29, Ichi tenkan 183.72 below, kijun 184.99 above

• Near base of 184.55-74 hourly Ichimoku cloud, 100-HMA 184.78, 200-HMA 184.36

• Spot looks to be gravitating around massive E1.3 bln 184.65 option expiries

• Rare for EUR/JPY to have such massive optionality nearby recently

• Could see action today contained between 100 and 200-HMAs
EUR/JPY daily:


EUR/JPY hourly:

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

• Pre-weekend USD buys, US yield surge behind USD/JPY push to 158.85 Friday

• USD/JPY still bid, Asia 158.64-87 EBS, looks to remain bid for now

• Holding just shy of 156.37-158.91 daily Ichimoku cloud top

• US yields surged Friday on view Fed could hike towards turn of this year

• Rise in 2-yr ylds sent JGB-Tsy yields wider to @265 bps, widest since Mar 23

• 10-year rate differentials narrower though, based at 178.4 bps Friday TWEB

• Japan FX intervention conspicuous in its absence Friday, to act this week?

• Little in way of MOF-speak too, many expect either, maybe even both today

• MOF maybe viewing Middle East developments, holding on to ammunition

• US-Iran impasse, less hopes now for deal sending crude oil prices higher

• Massive $5.7 bln in option expiries today at 159.00 strike, to help cap?

• Decisive break above could result in major upside volatility

• Usual Tokyo fix Japanese importer demand eyed, specs playing it by ear

• Related comments , , ,

• And , also , on Fed ,

• US markets , , ,

• On US data , on US-Iran ,
USD/JPY:


JGB-US Treasury 2-year interest rate differential:

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

• AUD/USD steady early Mon trading subdued despite renewed U.S.-Iran threats

• Trump says clock ticking for Iran, Situation Room meeting expected Tue

• USD and UST yields rallied Fri as reality of potential Fed hikes sets it

• AUD remains vulnerable, break below 0.7100 support would accelerate fall

• RBA's Hunter speaks ahead May meeting minutes release Tue, AU Apr jobs Thur

• U.S. Apr industrial production +0.7% m/m, Reuters poll consensus +0.3%

• Range Asia 0.7147-526, 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.)

• IMM net USD G10 long cut a further $2.5bn in May 6-12 reporting period; $IDX -0.03%

• Note- $IDX rose 1-big-figure renders data irrelevant as CCYs likely resold in new period

• Mideast peace appears remote, Pres Trump losing patience w/iran

• Lots of streams; yen intervention by 160; UK political/fiscal issues; Fed hike odds rising

• EUR$ +0.42% in period, specs +8k contracts now +40.2k contracts

• $JPY -0.19%, specs -13.4k contracts now -75.1k; Oil rising, Fed hike odds as well lift USD

• GBP$ flat, specs +20.8k contracts now -43.1k; GBP$ down 2-big-figs since period close

• $CAD, +0.59%, specs -1.6k contracts now -16.2k; more hawkish Fed lifts USD

• AUD$ +0.8%, specs +6.3k contracts now +85k; like GBP pair lower in new period questions veracity

Majors w/IMM Performance Chart:


IMM Position Table:


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

• NY opened near 1.1650 after 1.1676-1.1617 traded overnight, selling took hold early

• Gains in US yields , rates brought out the USD buyers again

• Wider US-DE spreads & sharp gains in oil

helped sink EUR/USD

• Gold, silver, stock drops & USD/CNH rally helped underpin the USD buying

• EUR/USD hit 1.1619 then sat near 1.1630 late, the pair was down -0.35% in late in the day

• Techs lean bearish; RSIs are falling, pair is below the 200-DMA & broke below the 55-DMA

• Monthly inverted hammer for May, break below 1.1650/70 zone reinforce bearish signals
eurusd


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

• NY opened near 0.7170 after AUD/UD traded 0.7223-0.7140 overnight, the pair fell again

• US yield , rates gains helped USD add to overnight gains

• Gold, silver, copper & stocks fell while USD/CNH rallied as risk-off dominated

• AUD/USD fell to 0.7144 then bounced as the USD softened after Europe's close

• 0.7160 was neared, the pair was down -0.82% for the day in NY's afternoon

• AUD/USD traded down nearly -1.2% for the week heading into the weekend

• Techs lean bearish; RSIs indicate downward momentum, pair below 10- & 21-DMAs

• A monthly inverted hammer is in place for May, reinforces bearish signals
audusd


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

Credit Agricole CIB Research discusses the USD liquidity outlook.

"The USD liquidity glut may be starting to ease, as highlighted by the renewed modest widening of the USD cross-currency basis swap spreads. The glut could dissipate further in part given the increase of US Treasury cash holdings at the Fed that reflects growing UST issuance and thus could drain more market liquidity. The Middle Eastern conflict could keep energy prices and US rates bid as well and thus help drain more USD liquidity," CACIB notes.

"Against this backdrop, we expect USD-positive FX flows – resulting from investments in US stocks, USTs and/or FX carry trades – to gain in importance as FX market drivers too, in a boost to the USD across the board. A potential easing of the USD liquidity glut in coming days could further magnify the FX market impact of the incoming data releases," CACIB adds.

USD/JPY bulls retain the upper hand so long as the Bank of Japan is seen as falling further behind the curve as debt loads are growing.

Markets are increasingly recognizing that central banks, broadly, may be too accommodative given persistent inflation pressures, elevated energy prices, fiscal stimulus measures, and record-high equity markets.

This backdrop is steepening yield curves globally, pushing long-end yields toward multi-decade highs.

Rising back-end yields alongside high inflation create particular concern for yen bulls, as they intensify scrutiny over the sustainability of Japanese government finances.

That pressure is compounded by the prospect of increased foreign corporate issuance such as Alphabet tapping the yen bond market and likely converting proceeds into dollars.

While intermittent FX intervention has helped slow the yen’s depreciation, officials have recently remained quiet, allowing USD/JPY to grind higher within the daily cloud of 156.37-158.91 as markets absorb previous dollar sales.

But the broader structural backdrop, including Japan’s commodity import dependence and debt financing of defense and AI investment, remains yen-negative.

With sizeable option expiries near 159 set to roll off, spot could resume its climb toward and potentially beyond 160, a risk increasingly reflected in options pricing if congestion above 159 fails to cap .

A more decisive shift in BOJ policy is needed to alter bearish yen sentiment, and an earlier-than-expected rate hike cannot be ruled out.
Yen


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

SocGen Research sees a scope for the USD rally in the near-term.

Sterling continued its descent on Friday and is likely to remain under pressure in the coming weeks as intensifying UK political instability and fiscal concerns clash with a more austere global inflation backdrop, particularly in the U.S.. Cable hit a fresh five-week low of 1.3329 during European trading. The currency is reeling from heightened domestic uncertainty following a bevy of high-profile Labour resignations from Prime Minister Keir Starmer’s government, including Health Minister Wes Streeting. Compounding sterling's woes is the resurgence of U.S. dollar strength. Recent above-forecast U.S. CPI and PPI data, coupled with climbing oil prices, have solidified a persistent inflation outlook. This shift has bolstered expectations for a Federal Reserve rate hike in Q4, fundamentally altering the relative global rate path. While the U.S. inflation spike may foreshadow similar pressures in the UK—raising BoE hike expectations for H2 2026—the immediate focus remains on narrowing Fed-BoE policy expectations.

Market sentiment is pivoting as the previously dovish 2026 Fed path, fueled by expectations that new Chair Kevin Warsh would follow Donald Trump’s preference for lower rates, loses traction. High oil prices necessitate a more hawkish stance to prevent an inflationary spiral.

Technically, GBP/USD faces a daunting climb. Resistance is clustered between the 200-DMA at 1.3426 and the 100-DMA at 1.3481, former support levels. Further gains would target the 21-DMA at 1.3526.

On the downside, support is critical at today's low of 1.3329, which aligns closely with the lower Bollinger band at 1.3323 and the daily cloud base at 1.3322. A break below these levels could signal a further acceleration of the current downtrend toward late-March lows below 1.32.
GBP Chart:


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

Bank of America Global Research discusses its EUR outlook and trading bias in the near-term.

"EUR-G10 FX price action this year has been broadly in line with recent history. EUR screens as overvalued vs NZD and, to a lesser extent, CAD, GBP, SEK, and as slightly undervalued vs JPY, NOK, AUD. EUR-USD has been in line with recent history," BofA notes.

"Our commodities team sees energy markets as pricing a best-case scenario. Combined with strong US data, this keeps us cautious on EUR-USD near term. We would not rush to buy EUR vs JPY, nor sell vs GBP, given somewhat underpriced UK political risks. Meanwhile, SEK remains our preferred de-escalation hedge, also supported Sweden's fiscal stimulus," BofA adds.

ANZ Reserach summarizes its key FX outlook for the coming week.

"The meeting of presidents Trump and Xi has yet to deliver market-moving outcomes. The USD strengthened this week, driven largely by renewed weakness in JPY and GBP. In contrast, the AUD has held up much better," ANZ notes.

"We expect the AUD to remain a relative outperformer, underpinned by its carry advantage and energy-exporter status, which is an increasingly relevant parallel with the US. Elevated risk appetite reinforces this backdrop: our ANZ Risk Sentiment Index is at an all-time high, providing ongoing support for high-beta FX. JPY and GBP remain structural underperformers. Both are net energy importers facing fiscal uncertainty, while GBP also carries a persistent political-risk premium. These headwinds continue to weigh on relative performance," ANZ adds.

• EUR/USD hit 1.1676 overnight, sellers emerged and the pair turned lower

• Sharp gains in US yields , rates weighed on the pair

• US interest rate gains drove USD broadly higher; UDS/CNH rallied above 6.8140

• Wider US-German 2-year spread contributed to EUR/USD's fall

• Drops in gold , silver & stocks added to the USD dollar's bid

• EUR/USD hit a 1-1/2-month low of 1.1617 then bounced slightly

• Some early NY USD selling lifted EUR/USD towards 1.1645, pair traded down -0.21%

• Falling RSIs, move below 55-DMA, monthly inverted hammer are bearish tech signs
eurusd


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

• AUD/USD hit 0.7223 overnight, sellers emerged, the pair then fell sharply

• Big gains in US yields drove broad-based USD buying

• Risk assets sold on USD bid; gold, silver, copper & equities see big drops

• USD/CNH's rally above 6.8140 added to the risk-off sentiment

• AUD/USD fell below the 10- & 21-DMAs, hit an 8-session low of 0.7140

• The pair bounced into NY's open but still traded down -0.70% in early action

• Techs flash warnings to bulls; pair below 10- $ 21-DMAs, RSIs are falling

• A monthly inverted hammer is now in place for May, adds to bear signals
audusd


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

• USD/JPY weekly chart showing a doji/hammer into a bullish engulfing candle

• The candle signals supporting a more constructive look to USD/JPY

• Broad based dollar gains, broad based yield gains and fresh geopolitical concerns

• A toxic mix for the yen and the market appears happy to take the currency lower

• USD/JPY up to 158.67 (EBS) likely deep in rate checking territory: Thurs pullback cited

• Look for heightened market sensitivity/MOF presence on the approach to 159.00

• A huge $5 bln option strike at 159.00 expires at 10 a.m. New York time on Mon May 18
USD/JPY weekly chart:


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