Weekly FX Technical Analysis - 11th May 2026

FX markets continue to consolidate around major technical levels as traders balance softer USD sentiment against persistent geopolitical uncertainty.

GBP/USD is attempting to break higher toward 1.37, EUR/USD remains capped below 1.19, while USD/JPY stabilises after a sharp rejection from the 160 level.

With central bank expectations, political developments, and Middle East tensions continuing to shape sentiment, volatility is likely to remain elevated into the coming weeks.

GBP/USD

GBP/USD is trading around 1.3600, continuing to grind higher as Sterling tests the upper end of the recent consolidation range. Price action remains constructive above the 1.3450 support zone, with buyers continuing to defend dips despite resistance emerging near 1.3650–1.3700.

Potential Scenarios

• Bullish: A sustained break above 1.3650 would likely open a move toward the 1.3800 highs.

• Bearish: Failure to clear resistance could trigger a pullback toward 1.3450, with deeper support seen closer to 1.3200.

Macro Backdrop to Consider

The USD softened this week following renewed market speculation that the Federal Reserve may face increasing political pressure to pivot toward rate cuts later this year. At the same time, markets continue to monitor the evolving geopolitical backdrop in the Middle East, particularly around shipping security and energy supply concerns linked to the Strait of Hormuz. Sterling has remained relatively supported by resilient UK wage data and expectations the BoE may remain cautious in cutting rates too aggressively.

House View

Constructive GBP bias, particularly while price holds above 1.3450, though upside momentum may slow near the 1.3700 region.

GBP/USD: MAY ‘25 - PRESENT

EUR/GBP

EUR/GBP is trading around 0.8650, attempting to stabilise after testing support near the lower end of the broader multi-month range. Momentum remains weak overall, with the pair continuing to struggle beneath the 0.8700–0.8750 resistance zone.

Potential Scenarios

• Bullish: Recovery back through 0.8700 would reopen 0.8750/0.8800.

• Bearish: Failure to hold above 0.8600 risks renewed downside toward 0.8550.

Macro Backdrop to Consider

Relative growth expectations continue to favour GBP modestly over EUR, with the Eurozone economy still facing sluggish industrial activity and weak demand conditions. Markets are also becoming increasingly focused on whether the ECB will need to move more aggressively on rate cuts compared to the BoE. Political uncertainty across Europe and softer German manufacturing data continue to weigh on broader EUR sentiment.

House View

Neutral-to-bearish EUR/GBP, favouring Sterling outperformance while below 0.8750.

EUR/GBP: MAY ‘25 - PRESENT

EUR/USD

EUR/USD is trading around 1.1760, remaining elevated despite repeated failures to sustain a clean breakout above the key 1.1800–1.1900 resistance region. The broader trend remains constructive, although momentum has moderated in recent sessions.

Potential Scenarios

• Bullish: A decisive break above 1.1900 would expose the psychological 1.2000 handle.

• Bearish: A move back below 1.1650 risks a deeper retracement toward 1.1500.

  
  

Macro Backdrop to Consider

The pair continues to trade primarily on USD sentiment and evolving Fed expectations. Markets remain highly sensitive to any developments surrounding future Fed leadership discussions and political commentary around monetary policy. Meanwhile, the Euro has remained supported by broad USD weakness rather than strong domestic fundamentals, with Eurozone growth still subdued and inflation pressures continuing to ease.

House View

Moderately bullish EUR/USD, but preference remains to buy pullbacks rather than chase rallies near resistance.

EUR/USD: MAY ‘25 - PRESENT

USD/JPY

USD/JPY is trading around 157.10, stabilising after last week’s sharp pullback from the 160.00 region. The broader uptrend technically remains intact, although momentum has weakened significantly near recent highs.

Potential Scenarios

• Bullish: Recovery back above 158.50–160.00 would refocus attention on 162.00.

• Bearish: Sustained weakness below 156.00 risks a deeper correction toward 154.00–152.00.

Macro Backdrop to Consider

Markets remain highly alert to potential Japanese intervention following renewed volatility near 160. At the same time, softer US yields and growing expectations of eventual Fed easing have reduced some of the bullish momentum supporting the pair earlier this year. Broader geopolitical tensions and risk sentiment remain key variables for safe-haven JPY demand.

House View

Neutral-to-bullish, but increasingly cautious on upside continuation given intervention risks and fading momentum.

USD/JPY: MAY ‘25 - PRESENT

As always, if you’d like to discuss these moves in more detail, or how they could impact your business or personal requirements, please don’t hesitate to get in touch.

info@k2-fx.com

+44 203 355 4603

Disclaimer: The information in this publication is provided for general information purposes only. It does not constitute financial or investment advice, nor should it be relied upon as such. Readers should consider their own circumstances and seek independent advice where appropriate.