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USD Strength Pressures FX Markets as Euro and Pound Extend Losses | 18th May, 2026

USD Strength Pressures FX

Global forex markets remain under pressure as renewed US Dollar strength continues to dominate price action, driven by persistent inflation concerns and reinforced expectations of a hawkish Federal Reserve. Major currencies, including the Euro, British Pound, and Canadian Dollar, are extending losses, while risk-off sentiment keeps cross pairs volatile and biased to the downside.

GBP/USD Forecast

Current Price and Context

GBP/USD is extending its decline with price action pointing toward further downside below the 1.3300 level. The pair remains heavily pressured by stronger US Dollar momentum and weak risk sentiment.

Key Drivers

• Geopolitical Risks: Risk-off flows continue supporting USD demand over GBP

• US Economic Data: Rising inflation expectations reinforce Fed tightening outlook

• FOMC Outcome: Hawkish Fed pricing continues weighing on Sterling

• Trade Policy: Limited UK-specific support for GBP

• Monetary Policy: BoE-Fed divergence favors USD strength

Technical Outlook

• Trend: Bearish

• Resistance: 1.3380

• Support: 1.3250

• Forecast: Further downside likely if USD momentum persists

Sentiment and Catalysts

• Market Sentiment: Bearish

• Catalysts: US inflation expectations and Fed commentary

USD/CAD Forecast

Current Price and Context

The Canadian Dollar is edging lower as rising US inflation reinforces expectations of additional Federal Reserve tightening. USD/CAD remains supported by broad USD strength and softer risk sentiment.

Key Drivers

• Geopolitical Risks: Risk-off flows favor USD over CAD

• US Economic Data: Inflation pressures support Fed hawkish outlook

• FOMC Outcome: Higher-for-longer rates continue driving USD demand

• Trade Policy: Oil-linked CAD support remains limited

• Monetary Policy: Fed-BoC divergence widens

Technical Outlook

• Trend: Bullish USD/CAD

• Resistance: 1.3750

• Support: 1.3620

• Forecast: Gradual upside bias remains intact

Sentiment and Catalysts

• Market Sentiment: Bearish CAD

• Catalysts: US inflation outlook and oil price movement

EUR/USD Forecast

Current Price and Context

The Euro remains under pressure as downside risks against the US Dollar intensify, with focus shifting toward the 1.1570 level. Weak sentiment continues to dominate EUR performance.

Key Drivers

• Geopolitical Risks: Safe-haven flows continue supporting USD

• US Economic Data: Stronger inflation outlook boosts USD demand

• FOMC Outcome: Hawkish Fed expectations widen rate divergence

• Trade Policy: Weak Eurozone sentiment limits EUR upside

• Monetary Policy: ECB remains comparatively dovish

Technical Outlook

• Trend: Bearish

• Resistance: 1.1650

• Support: 1.1570

• Forecast: Downside pressure likely to continue

Sentiment and Catalysts

• Market Sentiment: Bearish

• Catalysts: US data and ECB commentary

EUR/GBP Forecast

Current Price and Context

EUR/GBP is dipping to session lows below 0.8720 as risk-off sentiment and stronger USD flows indirectly pressure the Euro relative to the Pound. Cross remains soft.

Key Drivers

• Geopolitical Risks: Risk aversion supports defensive currency positioning

• US Economic Data: Strong USD indirectly pressures EUR crosses

• FOMC Outcome: Fed strength impacts global FX sentiment

• Trade Policy: Weak Eurozone sentiment persists

• Monetary Policy: ECB-BoE divergence remains EUR-negative

Technical Outlook

• Trend: Bearish

• Resistance: 0.8780

• Support: 0.8680

• Forecast: Continued downside pressure likely

Sentiment and Catalysts

• Market Sentiment: Bearish EUR/GBP

• Catalysts: UK data and Eurozone sentiment

EUR/JPY Forecast

Current Price and Context

EUR/JPY shows a slight recovery above 184.50 but remains capped below key technical resistance, reflecting persistent risk-off sentiment and stronger USD-driven global tightening expectations.

Key Drivers

• Geopolitical Risks: Risk aversion supports Yen demand

• US Economic Data: Strong US inflation reinforces global tightening bias

• FOMC Outcome: Hawkish Fed outlook pressures risk currencies

• Trade Policy: Weak Euro sentiment persists

• Monetary Policy: BoJ remains relatively stable versus ECB weakness

Technical Outlook

• Trend: Neutral to bearish

• Resistance: 185.20

• Support: 183.80

• Forecast: Range-bound with downside bias

Sentiment and Catalysts

• Market Sentiment: Cautious

• Catalysts: Risk sentiment and US data flow

Wrap-Up

Global forex markets remain firmly in USD-driven momentum as rising US inflation expectations reinforce the Federal Reserve’s hawkish outlook, keeping pressure on major currencies including the Euro, Pound, and Canadian Dollar, while traders continue to position defensively amid ongoing macro uncertainty and risk-off sentiment across global financial markets.

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Moneta Markets is a trading name of Moneta Markets (Pty) Ltd, an authorised Financial Service Provider (“FSP”) registered and regulated by the Financial Sector Conduct Authority (“FSCA”) of South Africa under license number 47490 and located at 18 Cavendish Road, Claremont, Cape Town, Western Cape, 7708 South Africa. Company Registration Number: 2016 / 063801 / 07. Contact Phone Number: +27 (10) 1429139. Operational Office: 18 Cavendish Road, Claremont, Cape Town, Western Cape, 7708 South Africa.

Moneta Markets is a trading name of Moneta Markets Ltd, registered under Saint Lucia Registry of International Business Companies with registration number 2023-00068.

Moneta Markets Trading Limited is regulated by the Financial Services Commission (FSC) of Mauritius, with Company No. 211285 GBC and License No. GB24203391. Its registered office is located at Suite 201, 2nd Floor, The Catalyst, 40 Silicon Avenue, Ebene Cybercity, Mauritius.

Mmonexia Ltd registered in the Republic of Cyprus with registration number HE436544 and registered address at Archbishop Makarios III, 160, Floor 1, 3026, Limassol, Cyprus.
Legal Information:
Moneta Markets is a trading name of Moneta Markets (Pty) Ltd, an authorised Financial Service Provider (“FSP”) registered and regulated by the Financial Sector Conduct Authority (“FSCA”) of South Africa under license number 47490 and located at 18 Cavendish Road, Claremont, Cape Town, Western Cape, 7708 South Africa. Company Registration Number: 2016 / 063801 / 07. Contact Phone Number: +27 (10) 1429139. Operational Office: 18 Cavendish Road, Claremont, Cape Town, Western Cape, 7708 South Africa.

Moneta Markets is a trading name of Moneta Markets Ltd, registered under Saint Lucia Registry of International Business Companies with registration number 2023-00068.

Moneta Markets Trading Limited is regulated by the Financial Services Commission (FSC) of Mauritius, with Company No. 211285 GBC and License No. GB24203391. Its registered office is located at Suite 201, 2nd Floor, The Catalyst, 40 Silicon Avenue, Ebene Cybercity, Mauritius.

Mmonexia Ltd registered in the Republic of Cyprus with registration number HE436544 and registered address at Archbishop Makarios III, 160, Floor 1, 3026, Limassol, Cyprus.