22 May

Week Ahead: EURUSD inches toward make-or-break support

May 22, 2026

By ForexTime 

  • EURUSD ↓ 1.1% YTD 
  • Germany CPI + US PCE combo = fresh volatility?
  • EU Flash CPI forecast to trigger moves of ↑ 0.3% & ↓ 0.2% 
  • US April PCE forecast to trigger moves of ↑ 0.5% & ↓ 0.6% 
  • Bloomberg FX model – 71.1% EURUSD – (1.1510 – 1.1730) 

The world’s most-traded FX pair is at a crossroads…and the stakes couldn’t be higher.

After a brief pause, EURUSD is heading straight for critical support at 1.1580.

This is the level that could define the pair’s direction for weeks to come. A clean break lower opens the door to steeper losses, while a firm bounce invites bulls back into the scene.

Bloomberg’s FX model puts a 71.1% probability of EURUSD trading within the 1.1510 – 1.1730 range this week – that’s a potential swing of over 100 pips.

Volatility is coming. The only question is which side it favours.

Why is the EURUSD under pressure

1) A broadly stronger dollar amid ongoing geopolitical risk, a limbo in peace talks and growing bets around higher US rates.

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2) Technical forces may also be at play with prices trading below the 50, 100 and 200-day SMA.

Key inflation data from Germany and the United States could spell fresh opportunities for the EURUSD in the week ahead:

Monday, 25th May

•        US Memorial Day holiday, with markets closed

Tuesday, 26th May

•        GBP: UK CBI distributive trades

•        USDInd: US Chicago Fed national activity index, CB consumer confidence, Dallas Fed manufacturing index, S&P/Case-Shiller home prices

 

Wednesday, 27th May

•        AUD: Australia CPI, RBA trimmed mean CPI, construction work done

•        EUR: Eurozone new car registrations

•        USDInd: US MBA mortgage rates, ADP employment change, API crude oil inventories

•        JPY: BoJ Governor Ueda speech

Thursday, 28th May

•        KRW: South Korea interest rate decision

•        EUR: Eurozone economic sentiment, Italy business and consumer confidence, Spain business confidence

•        CAD: Canada current account, BoC financial stability report

•        USDInd: US Core PCE, PCE inflation, GDP second estimate, durable goods orders, personal income, personal spending, initial jobless claims, new home sales, EIA crude oil inventories

Friday, 29th May

•        JPY: Japan unemployment, industrial production, consumer confidence, retail sales

•        GBP: UK Nationwide house prices

•        EUR: France, Spain, Italy and Germany preliminary CPI, German unemployment

•        CAD: Canada GDP

•        USDInd: US goods trade balance, wholesale inventories, Chicago PMI

 

Here are 4 key themes that could rock EURUSD:

 

1.     Ongoing Iran war

As the Iran war enters its 13th week, the global economy is absorbing the pressure from high energy prices and prolonged uncertainty.

While there seems to be some progress in talks, Tehran has publicly made it clear that it will not be handing over its enriched uranium stockpiles. Should tensions escalate, this could boost the dollar – enforcing downside pressure on the EURUSD.

 

2.     US April PCE report – Thursday 28th May

It’s a big week for the United States due to a volley of economic reports including the latest PCE report.

The February US personal income and spending report including the PCE index — the Fed’s preferred inflation gauge — will offer key insight into the direction of price pressures.

Markets are forecasting PCE deflator YoY to jump3.9% in April with the core figure rising to 3.3% from 3.2%.

Ultimately, any signs of rising price pressure may reinforce bets around higher US interest rates.

Traders are currently pricing in a 77% probability of a 25-basis point cut by December.

  • The EURUSD may tumble on signs of rising price pressures in the United States.
  • A cooler-than-expected PCE report could boost the EURUSD.

 

3.     Germany CPI report

A string of high impact data releases from Europe including the key CPI from Germany may provide critical insight into the economic outlook.

On Friday 29th May, the latest inflation figures from the largest country in Europe will be published with markets forecasting CPI to cool 2.8% YoY compared to 2.9% in the previous month.

Signs of rising inflationary pressures may reinforce bets around the ECB hiking as soon as June.

 

4.     Technical forces                                                                       

The EURUSD is under pressure on the daily charts with prices trading below the 50, 100 and 200-day SMA.

  • Should 1.1580 prove reliable support, this may trigger a rebound toward the 50-day SMA and 200-day SMA.
  • Weakness below 1.1580 could see a decline toward 1.1510 – the lower bound of Bloomberg’s FX model.

(Source BBG)

Bloomberg’s FX model points to a 71.1% chance that EURUSD will trade within the 1.1510 – 1.1730 range over the next one-week period.

 

Forex-Time-LogoArticle by ForexTime

 

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com


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