ATFX Market Outlook - 18th May 2026

US Hints at Potential Resumption of Military Action Against Iran

(By ATFX Analyst Team)

Key Takeaways

Trump is reportedly set to meet with senior national security advisers on Tuesday to discuss options for military action against Iran. Over the weekend, Iran said it has established a mechanism to manage vessel transit through the Strait of Hormuz via a designated shipping lane, which will be announced shortly.

The Federal Reserve announced on Friday that it has appointed Powell as interim chair until Warsh is sworn in.

Key Focus Today: Markets face a barrage of critical economic data releases this week, including Japan’s GDP, UK CPI, Eurozone PMIs, the Fed minutes, and Nvidia's earnings. These data points will not only test economic resilience across nations but also likely dictate the short-term direction of the currently volatile forex, US equity, and commodity markets.

Global Market Review

Last Friday, US equities pulled back from record highs, with all three major indices tumbling more than 1%. The Dow closed down 1.07%, the S&P 500 slipped 1.24%, and the Nasdaq shed 1.54%. Despite the sell-off, the S&P 500 still recorded its seventh consecutive weekly gain, marking its longest weekly winning streak since December 2023.

Driven by expectations of Federal Reserve interest rate hikes, US Treasury yields surged to a one-year high, while the US dollar strengthened for a fifth consecutive session, locking in its biggest weekly gain in two months. Gold prices fell to a more than one-week low on Friday, weighed down by a stronger dollar and rising Treasury yields, ending the week 3.7% lower. Meanwhile, oil prices jumped more than 3% as fading hopes for a US-Iran agreement fueled ongoing concerns over global supply, lending continued support to crude.

Key Events Today:

10:00 CN Industrial Production & Retail Sales APR **

May 19th

07:50 JP GDP Prel Q1 ***

09:30 AU RBA Meeting Minutes ***

14:00 GB Unemployment Rate MAR **

20:30 CA CPI APR **

22:00 US Pending Home Sales APR **

EURUSD

Resistance: 1.1639/1.1655

Support: 1.1584/1.1568

Growing market expectations of a hawkish Fed stance, together with broad dollar strength and rising US yields, pushed the euro lower for a fourth consecutive session on Friday, hitting a five-week low.

Analyst View: Following successive declines, the EUR/USD pair has opened up room for further downside towards 1.1600. A break below this level would see the pair enter its primary trading range from March, potentially targeting the 1.1584/1.1568 zone next.

Bias: Short-term Bearish

GBPUSD

Resistance: 1.3350/1.3408

Support: 1.3291/1.3233

The pound fell against the US dollar for a fourth consecutive session, breaking below the 1.3400 level on Friday to hit a new monthly low. Sterling remains pinned down by a rampant US dollar and lingering fiscal and political anxieties surrounding Prime Minister Starmer's administration.

Analyst View: With GBP/USD approaching the psychological 1.3300 level, the pair is poised to move closer to its late-March lows. For now, market participants should monitor support in the 1.3291/1.3233 range.

Bias: Short-term Bearish

USDJPY

Resistance: 159.39/159.73

Support:158.28/157.94

USD/JPY broke above 158.80 on Friday, reaching a more than two-week high, boosted by a widening US-Japan yield differential. The economic risks stemming from the renewed escalation in US-Iran tensions temporarily offset market anxieties about potential yen intervention by Japanese authorities.

Analyst View: USD/JPY recorded its fifth consecutive day of gains on Friday and extended its rally this morning towards the 159 level. If it breaks above this level, some positions may turn cautious ahead of a potential test of the critical psychological 160 mark, which could cap further significant upside for the pair.

Bias: Cautious at Highs

US Crude Oil Futures (JUL)

Resistance: 104.68/107.46

Support: 100.28/98.06

Crude oil prices extended their rally last Friday as supply risks through the Strait of Hormuz persisted, despite US-China talks that failed to produce concrete plans to reopen the strait. However, market participants remained attentive to Iran's weekend announcement that it had established a mechanism to manage vessel transit through a designated shipping lane.

Analyst View: Crude prices edged higher again this morning, testing last week's highs. The immediate focus is on whether prices can break above the $104 handle, which would signal potential to challenge resistance at the top of the recent ascending channel.

Bias: Short-term Bullish

Spot Gold (XAU/USD)

Resistance: 4572/4604

Support: 4468/4435

Spot Silver

Resistance: 77.91/80.10

Support: 70.84/68.69

Market expectations of a hawkish Fed stance continue to underpin US Treasury yields and the strong US dollar. Furthermore, as Donald Trump issued fresh warnings to Iran, escalating the risk of heightened Middle East tensions, gold prices extended their decline this morning after hovering near monthly lows on Friday.

Analyst View: Gold prices hit their lowest level since late March this morning, leaving the sub-$4,500 zone heavily tested. If prices test previous lows, attention will shift to support at $4,468/$4,435, which could attract bargain hunters at lower levels.

Bias: Sluggish Trading

Dow Jones Futures

Resistance: 49853/50033

Support: 49458/49281

The AI-driven rally in US equities paused last Friday as sticky inflation increasingly pointed to further Federal Reserve interest rate hikes, prompting a capital outflow from the stock market. The Dow Jones Industrial Average fell more than 500 points, marking its steepest single-day drop since late March.

Analyst View: After breaking below key moving averages on the daily chart last Friday, the Dow has pulled back from its recent highs. Downside momentum is expected to persist in the short term, with market participants closely watching support in the 49,458/49,281 range.

Bias: Under Pressure (Short-term)

NASDAQ 100

Resistance: 29499/29886

Support: 29006/28619

Mega-cap tech stocks recorded broad losses last Friday, with Micron Technology tumbling 6.62%, Intel down 6.18%, Nvidia sliding 4.42%, and Tesla shedding 4.75%. Nasdaq led the declines across the three major indices.

Analyst View: Although the Nasdaq pulled back from record levels last Friday, prices have not moved significantly below recent highs. As long as the index holds above its 10-day moving average, bulls could attempt a rebound. However, current market caution may cap gains, particularly ahead of Nvidia's earnings release this week.

Bias: Upside capped at highs

Bitcoin (BTC/USD)

Resistance: 78871/79806

Support: 76084/74912

Bitcoin falls to $77,000 as rate-hike fears trigger a massive $550M long flush, extending losses after a sharp reversal in risk appetite sparked a wave of long-position liquidations. Markets fret over a continued U.S.-Iran stalemate and rising inflation.

Analyst View: BTC/USD extended its downside on Monday, remaining near its lowest levels since the start of this month. The immediate focus is on support within the $76,084/$74,912 range, with market participants watching closely to see whether the late-March lows will become the next target.

Bias: Trading with a Weak Bias

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