Weekly Forex Forecast – AUD/USD, S&P 500 Index, NASDAQ 100 Index, Brent Crude Oil, Gasoline

Fundamental Analysis & Market Sentiment

I wrote on 3rd May that the best trades for the week would be:

1. Long of Brent Crude Futures if we get a daily close above $112.50. This set up last Monday, but unfortunately the trade immediately turned bearish, producing a loss of 11.49%.

2. Long of Gasoline Futures (or UGA ETF). This produced a loss of 1.19%.

3. Long of the S&P 500 Index following a daily close above 7,230.12. This set up on Tuesday and produced a gain of 1.92%.

4. Long of the NASDAQ 100 Index following a daily close above 27,685.40. This set up on Tuesday and produced a gain of 4.35%.

The overall loss of 6.41% last week averaged as a per asset loss of 1.60%.

A summary of last week’s most important data in the market:

1. Reserve Bank of Australia Policy Meeting: Cash Rate, Rate and Monetary Policy Statements – the Cash Rate was hiked by 0.25% as was widely expected, although the comments on inflation risks to the upside gave a minor hawkish tilt, with inflation standing well above target. This helped strengthen the Aussie in line with its long-term bullish trend.

2. US JOLTS Job Openings - approximately as expected.

3. US ISM Services PMI – approximately as expected.

4. New Zealand Unemployment Rate – this fell unexpectedly from 5.4% to 5.3%, giving a small and temporary boost to the relative value of the Kiwi.

For yet another week, last week’s economic data releases were much less influential upon the markets than the ongoing US/Iran negotiations/standoff. The prediction market site Polymarket sees a US / Iran peace deal by the end of next month as likely, and a 45% chance of Iran agreeing to hand over its enriched uranium by the end of 2026.

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We are seeing naval clashes between Iran and the USA around the Strait of Hormuz as the US restarts Project Freedom to forcibly reopen the Strait (now Saudi Arabi and Kuwait have changed their stances on allowing their territory to be used by the USA for this operation) and continues its blockade of Iran. Iran has also attacked the U.A.E. President Trump has (yet again) set a deadline of next Thursday for Iran to agree to a deal that would be acceptable to him, saying that if there is no deal, the war will restart.

The market consensus is off my pessimistic take, and optimism over a deal has helped push stock markets in the USA, South Korea, and Japan to new record high prices.

The result of these latest developments are lower prices for crude oil and gasoline, and higher prices for stocks and other risky assets such as the Australian Dollar and even Bitcoin.

The Week Ahead: 11th – 15th May

The outcome of negotiations and the ceasefire concerning the Middle East war is likely to remain very influential on the market over the coming week, with President Trump’s deadline expiring Thursday when he is scheduled to meet with President Xi of China, which will also be a big event and could affect the market.

The slew of highly important US data, notably US CPI (inflation) and PPI, will be closely watched. Both Goldman Sachs and the Bank of America have recently put back their assessment of the timing of US rate cuts. The CME FedWatch tool is even more hawkish, not seeing any rate cuts as likely before 2028.

The coming week’s most important data points, in order of likely importance, are:

1. US CPI (inflation)

2. US Fed Chair Nomination Vote

3. US PPI (purchasing power index)

4. US Retail Sales

5. UK GDP

Thursday is a public holiday in Germany, France, and Switzerland.

Monthly Forecast May 2026

Currency Price Changes and Interest Rates

For the month of May, as there is no clear trend in the US Dollar, I made no monthly forecast.

Weekly Forecast 11th May 2026

This week, I made no weekly forecast, as there were no unusual movements in the Forex market last week.

Volatility declined last week, with only 15% of currency pairs moving by more than 1% in value. Next week’s volatility is likely to be higher, with Trump’s Iran deadline, Trump’s meeting with Chinese President Xi, and key US inflation and related data all on the agenda.

You can trade these forecasts in a real or demo Forex brokerage account.

Technical Analysis

Key Support/Resistance Levels for Popular Pairs

Key Support and Resistance Levels

US Dollar Index

The US Dollar printed a bearish near pin, near inside candlestick last week, which is bearish price action. We have a mixed long-term trend, with the 3-month trend bullish and the 6-month trend bearish.

The greenback is clearly within a long-term consolidation phase, so we cannot really expect much of a trend in the US Dollar here. However, bullish stock markets and risk assets in general are weakening the US Dollar, even as bets on rate hikes weaken and the Fed takes a more hawkish tilt, and as major banks readjust their forecasts on rates in a more hawkish direction.

I think the greenback will be more driven by the progression of the USA / Iran standoff– if war breaks out again, it will likely boost the Dollar, not so much as a haven but more as an effect of the inflationary shock of the rising energy prices. If we get a peace deal, conversely, it will probably be bearish for the US Dollar.

Markets have become less optimistic about a deal, but so far, this is not boosting the USD. I think it will be wide to disregard the USD in trading this week – just look at the other side of the trade – or even to take a short bias, which would be supported by the recent price action.

US Dollar Index Weekly Price Chart

AUD/USD

The AUD/USD currency pair got a boost from President Trump talking up the prospect of a peace deal with Iran over the near term, and it rose to make a new 3.5 year high and closed at a fresh weekly high over the same period. The weekly candlestick is close to being a bullish pin bar. These are bullish signs, although some of the week’s gains were given up.

The Aussie isn’t quite the risk barometer it used to be, but it still responds to a more risk-on environment, and this is what we have now, as well as a weakening US Dollar. These factors point to more upside.

The Reserve Bank of Australia’s hawkish policy meeting last week has also helped to create a more bullish tone. A final factor strengthening the Aussie is that it now has the highest interest rate of any major currency, at 4.35%, so it will increasingly be a long component of carry trades in the Forex market.

I do not like to trend trade this instrument, but I think that at least day traders can look for long trades in this currency pair over the coming week as bounces off support levels. However, be aware that there is key US data and Thursday’s Trump / Iran deadline which could cause a sudden and dramatic shift in the market environment and send this currency pair tumbling.

AUD/USD Weekly Price Chart

S&P 500 Index

The S&P 500 Index rose again last week, as its extraordinary turnaround from its lows in late March continues. The price rose last week to trade at a new all-time high price, and it closed right on its high. These are very bullish signs showing that the Index is rising in blue sky with good bullish momentum. It’s a great idea to be long of the US stock market when it is making new highs.

The stronger bullish momentum was caused by two events:

1. President Trump started talking up the prospect of a peace deal with Iran within one week.

2. Better than expected earnings data in the tech sector.

This means that if the deal is not made by Thursday, and Trump does not extend his deadline, the war might re-erupt and send stocks lower, although it is also possible that stock markets might ignore it. The concern is more about the war causing inflationary price shocks than about the implications of escalation.

Despite the geopolitical risk, I very much see this stock market index as a buy and I am long already.

S&P 500 Index Weekly Price Chart

NASDAQ 100 Index

Everything I wrote above about the S&P 500 Index applies equally to the NASDAQ 100 Index, but the bullishness here is even stronger, with tech stocks leading the US stock market higher on higher-than-expected earnings, and the NASDAQ 100 Index rising by notably more than the S&P 500 Index did last week. The NASDAQ 100 has historically produced a considerably higher average return than the S&P 500 Index, so if you want to be long there, you should probably long here too. I am already long of QQQ (a NASDAQ 100 Index tracking ETF).

NASDAQ 100 Index Weekly Price Chart

Brent Crude Oil Futures

Brent Crude Oil futures made a fresh daily high close but not a true bullish breakout last Monday as the war between the USA and Iran looked in danger of starting again. However, President Trump turned the market around by pausing “Project Freedom” and talking up the prospect of a peace deal late last Monday. This event caused the market to be more bullish on a peaceful resolution to the war, and this sent energy, notably Brent Crude Oil, lower, while stocks rose strongly.

The USA has since restarted Project Freedom and has had some naval clasher with Iranian forces around the Strait of Hormuz. This has helped the price of Brent Crude seem to bottom out a bit.

If the USA begins bombing Iran again, following the failure of talks, we will likely see a push into new highs. Trump’s latest deadline expires this Thursday, although his deadlines no longer carry much credibility. Yet a resumption of the war soon is a real possibility. In my opinion, Trump will insist on a handover of the enriched uranium, and I believe the Iranian regime will never agree to hand it over. It likely cannot realistically be taken by force.

I think that a long trade in this situation where the prospect of a peace deal can always arise is always going to be risky and prone to sudden large losses. However, the logic of the confrontation is towards higher crude oil prices, so I am ready to go long again if we get a new high daily closing price. The daily price chart below shows how we have been getting tests and failures at the swing high since the initial crisis stabilized.

If you do go long, Brent will likely be the better vehicle than WTI, as it is more exposed to events in the Strait of Hormuz.

Brent Crude Oil Futures Daily Price Chart

Gasoline Futures

RBOB Gasoline Futures traded lower last week after President Trump suspended Project Freedom (forcibly reopening the Strait of Hormuz) and talked up the prospect of a peace deal with Iran by 14th May. This sent crude oil sharply lower quickly, by about 10%.

Despite the sharp fall in crude oil which I covered above, Gasoline held up better, the daily price chart below shows that we have just seen a relatively minor bearish retracement. Ongoing tension keeps the price elevated, and the Gasoline price seems to “lead” the price of crude oil.

For these reasons, should war restart or events take an otherwise darker turn in the ongoing conflict, I see Gasoline as most likely to make the kind of bullish breakout that might be traded on the long side. Everything I wrote earlier about crude oil also applies here.

I will take a long trade in Gasoline if the RBOB Gasoline Future makes a daily (New York) close above $3.7382.

Gasoline futures are too large for most retail traders, so using a CFD or an ETF like UGA could be a more accessible way to get exposure.

Gasoline Futures Daily Price Chart

Bottom Line

I see the best trades this week as:

1. Long of Brent Crude Futures (or a suitable ETF) if we get a daily close above $114.44. This is unlikely to set up, unless there is a surprise resumption of the war.

2. Long of Gasoline Futures (or UGA ETF) following a daily close above $3.7382.

3. Long of the S&P 500 Index.

4. Long of the NASDAQ 500 Index.