Volatility continues to drive the global financial markets as major central banks diverge in policy direction, geopolitical risks escalate with renewed trade tensions, and sentiment around the U.S. dollar remains fragile. Recent downgrades of the U.S. credit rating by Moody’s, dovish signals from the Fed, and political uncertainty tied to tariff policies under President Trump are weighing on USD strength, even as other currencies face unique pressures of their own.
🇪🇺/🇺🇸 EUR/USD Outlook – Euro vs U.S. Dollar
Current Overview:
The euro has shown signs of bullish exhaustion and failed to break out of a descending channel, currently trading around 1.1257. The outlook remains vulnerable to a deeper pullback toward the 1.10 psychological level, especially as Eurozone fundamentals are underwhelming.
🔑 Key Drivers:
- Growth Downgrade: The European Commission revised 2025 GDP growth to 0.9%, citing tariff pressures and external uncertainty.
- Inflation: Forecast to reach the ECB’s 2% target by mid-2025, which limits future rate hikes.
- Technical Setup: Price remains below key levels (1.1270), with a possible fill of the 1.1170 gap and downside toward 1.0986 if 1.1230 breaks.
🔻 Bearish Scenario:
- Failure to regain 1.1270 keeps pressure intact.
- Break below 1.1230 could trigger selling toward 1.1170, 1.1088, and possibly 1.0986.
🔼 Bullish Scenario:
- Sustained move above 1.1293 could pave the way toward 1.1379 and ultimately 1.1474.
🔁 Support: 1.1219, 1.1170, 1.1088
🔁 Resistance: 1.1270, 1.1293, 1.1379
Forecast Bias: Bearish below 1.1270, targeting 1.1170–1.10 zone
🇬🇧/🇺🇸 GBP/USD Outlook – British Pound vs U.S. Dollar
Current Overview:
The British pound has advanced toward 1.3361, capitalizing on weakness in the U.S. dollar and optimism following a major UK-EU post-Brexit cooperation agreement.
🔑 Key Drivers:
- UK-EU Deal: Renewed partnership through 2038 strengthens investor confidence.
- Fed Policy Shift: Increasing U.S. bond purchases suggest dovish intent, undermining USD.
- Technical Shift: Clear break above 1.3344–1.3357 signals trend reversal. Bullish waves dominate price structure.
🔼 Bullish Scenario:
- Holding above 1.3357 keeps momentum toward 1.3425.
- Sustained breakout at 1.3435 opens the path toward 1.3794 (127.2% Fib extension).
🔻 Bearish Scenario:
- Break below 1.3344 may trigger correction to 1.3265, with deeper support at 1.3205 and 1.3121.
🔁 Support: 1.3326, 1.3253, 1.3205
🔁 Resistance: 1.3382, 1.3435, 1.3794
Forecast Bias: Bullish while above 1.3344, targeting 1.3435, extended to 1.3794 on breakout
🇺🇸/🇯🇵 USD/JPY Outlook – U.S. Dollar vs Japanese Yen
Current Overview:
The yen is holding firm near 144.85, supported by expectations of rising Japanese inflation and safe-haven demand amid trade and credit concerns in the U.S.
🔑 Key Drivers:
- US Credit Downgrade: Weakens USD appeal.
- Japan Inflation Outlook: Higher price pressures may delay BoJ normalization but support JPY near term.
- Trade Tensions: U.S.-Japan trade talks could influence sentiment.
🔻 Bearish Scenario:
- Sustained pressure below 144.00 could drag the pair toward 143.01, with room to fall further if U.S. economic concerns intensify.
🔼 Bullish Scenario:
- A reversal and consolidation above 147.12 would signal recovery toward 148.28 and 150.47.
🔁 Support: 144.00, 143.01
🔁 Resistance: 144.75, 145.46, 147.12
Forecast Bias: Neutral to bearish, watching for sustained break below 144.00 for deeper correction
🇦🇺/🇺🇸 AUD/USD Outlook – Australian Dollar vs U.S. Dollar
Current Overview:
The Aussie is under pressure near 0.6395 following the RBA’s 25 bps rate cut to 3.85%, combined with dovish forward guidance.
🔑 Key Drivers:
- Dovish RBA: Clear signal of more cuts to come, weakening AUD.
- Global Trade Uncertainty: Tariff unpredictability threatens Australia’s export-dependent economy.
- Strong Labor Market: Remains a supportive factor but overshadowed by inflation decline and dovish central bank stance.
🔻 Bearish Scenario:
- Below 0.6373, downside opens to 0.6300 and possibly 0.6250, especially if USD strength resumes.
- Political instability and weak global growth exacerbate downside risks.
🔼 Bullish Scenario:
- Short-term rebound possible if USD weakens further, but sustained rallies need a move above 0.6482 and 0.6507.
🔁 Support: 0.6373, 0.6300, 0.6250
🔁 Resistance: 0.6440, 0.6482, 0.6507
Forecast Bias: Bearish, targeting 0.6373 and lower as RBA remains dovish
🇺🇸🇨🇦 USD/CAD Outlook – U.S. Dollar vs Canadian Dollar
Current Overview:
While no direct data was given for CAD, we extrapolate from broader market themes and oil-linked dynamics.
🔑 Key Drivers:
- Oil Prices: Continued volatility due to global demand concerns keeps CAD reactive.
- Bank of Canada: Expected to remain cautious amid slowing inflation, limiting CAD upside.
- US Weakness: USD softness offers relief, but risk sentiment dominates.
🔼 Bullish USD/CAD Scenario:
- If oil prices decline further or the Fed surprises dovishly, USD/CAD could rebound toward 1.3700–1.3800.
🔻 Bearish Scenario:
- A sharp drop in USD due to economic deterioration could send the pair back toward 1.3500 or 1.3400.
🔁 Support: 1.3540, 1.3450
🔁 Resistance: 1.3700, 1.3800
Forecast Bias: Neutral to slightly bullish, dependent on USD flows and oil performance
🌕 Gold (XAU/USD) Outlook – Gold vs U.S. Dollar
Current Overview:
Gold maintains bullish undertones as geopolitical risks, softening Fed policy stance, and the U.S. credit downgrade bolster demand for safe-haven assets.
🔑 Key Drivers:
- Safe-Haven Demand: U.S. credit rating downgrade and trade tensions increase gold’s appeal.
- Fed Dovish Tilt: Bond purchases signal easing, boosting non-yielding gold.
- Real Yields: Declining real yields support continued gold buying.
🔼 Bullish Scenario:
- Sustained rallies could target $2,440–$2,475, especially on USD weakness or further Fed dovishness.
🔻 Bearish Scenario:
- Profit-taking or surprise Fed hawkishness could drive gold back to $2,350 or $2,300, but downside likely limited by risk-off flows.
🔁 Support: $2,375, $2,350, $2,300
🔁 Resistance: $2,440, $2,475, $2,500
Forecast Bias: Bullish, with potential test of $2,440+ amid macroeconomic uncertainty
📊 Summary Table: As of May 21, 2025
| Asset | Bias | Key Support Levels | Key Resistance Levels | Target Direction |
|---|---|---|---|---|
| 🇪🇺 EUR/USD | Bearish | 1.1219, 1.1170, 1.1088 | 1.1270, 1.1293, 1.1379 | Targeting 1.1170 → 1.10 zone |
| 🇬🇧 GBP/USD | Bullish | 1.3326, 1.3253, 1.3205 | 1.3382, 1.3435, 1.3794 | Targeting 1.3435 → 1.3794 |
| 🇺🇸 USD/JPY | Neutral/Bear | 144.00, 143.01 | 144.75, 145.46, 147.12 | Watching for drop below 144.00 |
| 🇦🇺 AUD/USD | Bearish | 0.6373, 0.6300, 0.6250 | 0.6482, 0.6507 | Targeting 0.6373 → 0.6300 |
| 🇨🇦 USD/CAD | Neutral | 1.3540, 1.3450 | 1.3700, 1.3800 | Sideways/bullish bias |
| 🪙 XAU/USD | Bullish | 2,375, 2,350, 2,300 | 2,440, 2,475, 2,500 | Targeting 2,440 → 2,475 |
