Week Ahead: Dollar faces Trump/Xi & CPI showdown

May 8, 2026

By ForexTime

Fresh clashes near Strait of Hormuz fuels caution
Trump/Xi summit could influence fate of Iran war
US CPI data among other reports also in sharp focus
FXTM USDInd bearish with key levels at 98.00 and 97.50

The Iran war’s grip on market sentiment shows no sign of loosening with a fresh clash near the Strait of Hormuz leaving investors bracing once again.

But geopolitics may be only half of the story in the week ahead…

A Trump/Xi showdown and US inflation data could lead to heightened volatility across global financial markets:

Monday, 11th May

CNY: China PPI, CPI

Tuesday, 12th May

AUD: Australia NAB business confidence
GER40: Germany CPI, ZEW survey
USDInd: US CPI, Federal budget balance

Wednesday, 13th May

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CAD: Canada central bank minutes
EUR: Eurozone GDP, industrial production
US500: US PPI, mortgage applications
OIL: IEA and OPEC release their monthly oil market reports.

Thursday, 14th May

GBP: UK GDP, Industrial production
USDInd: US business inventories, initial jobless claims, retail sales
Trump visits China for meetings with President Xi Jinping

Friday, May 15

JPY: Japan PPI, machine tool orders
NZD: New Zealand food prices, manufacturing PMI
USDInd: US industrial production, empire manufacturing

FXTM’s USDInd has been trapped within a range since early April with geopolitical risk and inflation fears triggering sharp fluctuations.

With prices testing support at 98.00, could a breakout be on the horizon?

Here are 3 key factors that spark big moves:

1) Iran war (Week 11)

As the Iran war enters its 11th week, the global economy is absorbing the pressure from high energy prices and prolonged uncertainty.

The recent clash threatens to fracture a fragile ceasefire as the two sides discuss an end to the war. If no progress is made or talks fall apart this could fuel risk aversion – boosting the USD as a result.

2) US CPI report

The incoming US Consumer Price Index (CPI) will offer a key read on inflation amid the ongoing conflict in Iran.

Markets are forecasting:

CPI year-on-year (April 2026 vs. Arpil 2025) to rise 3.7% from 3.3%
CPI month-on-month to cool 0.6 from 0.9%
Core CPI year-on-year to rise 2.7% from 2.6%
Core CPI month-on-month to rise 0.3% from 0.2%

Signs of conflict-induced inflation may boost expectations of the Fed hiking rates.

3) Trump/Xi summit

President Donald Trump will meet President Xi Jinping in China, in what could be a critical moment between the world’s two largest economies.

There will be plenty on the agenda including the closure of the Strait of Hormuz which has disrupted China’s energy imports. Should the summit conclude on a positive note and boost hopes of the Hormuz re-opening this may be a welcome development to global markets.

However, if talks breakdown and matters worsen – risk aversion may engulf markets which may boost the dollar.

4) Technical forces

FXTM’s USDInd is respecting a bearish channel on the daily charts.

A solid breakout and daily close above the 200-day SMA could signal a move back toward 99.00and 100.000
Sustained weakness below 98.00 could see prices decline back toward 97.50 and 96.00.