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The European May PMIs painted a gloomy picture, putting the economy on track for a quarterly decline by 0.2%. The composite indicator fell to a 31-month low of 47.5. The decline was driven both by manufacturing and services. The former still eked out growth (51.4) but the momentum created by anticipative buying (ahead of price increases and supply disruptions) is waning. Services activity on the other hand tumbled to a 5-year low (46.4), hit hard by the surge in the cost of living. New orders contracted across sectors, resulting outstanding business being reduced to the largest extent since end 2024. Staff reduction overall was the sharpest since August 2013 (excluding the pandemic). The Middle East conflict left clear traces through sharply lengthening supplier delivery times and continued rising prices pressures. Input cost inflation rose to a 3.5 year high while prices charged rose at their fastest pace in 38 months. The survey owners say the price gauges correspond with inflation running close to 4% in coming months. The impact of high energy prices is clearly visible and ties the hands of the ECB, at least according to markets. The ECB at the April policy meeting was seen as laying the groundwork for a June hike. The central bank’s chief economist’s speech two weeks later kind of rubberstamped the idea. Philip Lane’s slide pack showed how the oil futures curve was and still is clearly closer to the adverse scenario, which required a “limited monetary response”. Sources told news agency Reuters that such move in June was nearly a done deal. Even if a peace deal was reached before the meeting, the ECB would probably act to preserve credibility after signaling the move in April, they said, adding that there would be no assurances that any deal would hold and that energy prices would remain high for some time. Money markets assume 2-3 rate hikes by the end of the year. Front-end yields add 4.5 bps today with the long end more or less flat. US yield changes vary between 2 and 5.1 bps in a bear flattening move. The euro is facing some selling pressure, driving back below EUR/USD 1.16 in a mild risk-off climate and rising oil prices which offset about half of yesterday’s intraday drop ($108.5). Stocks lose around 0.5% in Europe and the US. The US PMI was close to expectations with services stabilizing at 50.9 and manufacturing improving to 55.3 on precautionary buying. The composite gauge matched April’s 51.7, pointing at a meagre 1% annualized growth in Q2. The survey price gauges indicate that inflation looks set to rise further just as the economy cools, the survey noted, as a surge in firm costs resulted in sharply higher selling prices. Front-end yields hold on to earlier gains after the report.

News & Views

In the Norges Bank’s (NB) Q2 survey, households expect inflation to be 4.4% 12 months ahead (up 0.3% from Q1). Prices are expected to rise 4.7% over the next 2-3 years (+0.2 ppts from Q1). Annual inflation in 5 years is seen at 5.1% (up 0.3%). Price expectations among economists and social partners (3.3% 1-y) were more modest. Business leaders raised theirs for the next year to 4.1%. 46.7% expect purchase prices to increase more over the next 12 months compared to the previous year (+17.6% from Q1). 33.1% expect the company’s selling prices to increase more than previous year (+8%). Annual 2026 wage growth among social partners is seen at 4.5%, up 0.4 ppts. The NB at the May meeting already raised the policy rate by 25 bps to 4.25% amid too high and above-target inflation for several years. The survey doesn’t provide much reason for NB to change the indication that the policy rate still might be raised somewhat further by year end. Money markets see (more than) one additional 25 bps hike by September. At EUR/NOK 10.71, the krone holds at the strongest levels against the euro since early 2023.

UK private sector output fell for the first time since April 2025 with the UK composite PMI dropping from 52.6 to 48.5. The decline was due to a sharp downturn in the services economy (47.9, a 64 month low). Aside from the pandemic, it was the lowest level for nearly a decade. Manufacturing output still improved (52.4 from 51.8). The decline in the services sector was seen as being due to economic hesitancy and weaker investment sentiment, alongside delayed spending decisions in response to the Middle East war. Some respondents also cited political uncertainty weighing on confidence. Manufacturing still was supported by frontloading ahead of expected price rises and supply issues. Private payroll numbers fell for the twentieth successive month. Input inflation eased slightly since April, but remained well above its long-run average. Alongside higher energy and raw materials prices, wage pressures also added to costs. Prices charged by UK private sector firms continued to rise sharply, especially in manufacturing (factory gate prices rising at fastest pace since July 2022). Survey owner S&P indicates that the May PMI suggest a 0.2% quarterly contraction.

• WTI oil corrected strongly yesterday on Trump's announcement that a deal is close, but the reality could be less optimistic.
• Traders are preparing for a rocky path to peace, as oil rallies back above $100 with the situation still uncertain.
• Exploring an in-depth technical analysis of crude oil.

WTI crude oil corrected strongly yesterday following President Trump's optimistic announcement that a diplomatic deal was in its final stages, but the geopolitical reality is proving to be much less straightforward.

As the market quickly learned this morning, sometimes headlines are not enough, especially when Trump is posting a dozen each day.

Ayatollah Mojtaba Khamenei has reportedly announced that the nation insists on keeping its near-weapons-grade enriched uranium stockpile within its borders.

This condition remains an absolute dealbreaker for the United States, so this could prove to be another barrier to a longer-run deal.

Despite yesterday's massive wave of diplomatic enthusiasm, it is now clear that the proposed agreement still harbors severe, contentious roadblocks that must be navigated before any true resolution is reached.

Peace deal odds for June 30. Source: Polymarket, May 21, 2026.

Consequently, traders are actively preparing for a highly rocky and volatile path to peace.

With the immediate diplomatic situation once again steeped in heavy uncertainty, the geopolitical risk premium is aggressively flooding right back into energy markets, sending WTI violently rallying back above the $100 psychological handle today.

Now, let's take a closer look at the technical analysis for WTI crude to see if prices can remain above $100 for long.

US Oil Intraday Timeframe Analysis

WTI 4H Chart and Technical Levels

WTI Oil 4H chart. Source: TradingView, May 20, 2026.

WTI crude is stuck in a large triangle formation, currently consolidating between $110 and $98, a key development to watch.

Recently rejecting its upper bound on rumors of a new deal, the commodity broke its upward channel, but this was not enough for sellers to push momentum lower.

Buyers stepped back into the commodity just shy of the 4H 200-period MA and the commodity is now back 5% higher since. Check out reactions within the $106 to $108 resistance zone as the action gets back there.

WTI Technical Levels:

Resistance Levels

• $106.50 broken channel lows
• $106 to $108 June 2022 resistance
• $109 triangle resistance
• 2022 and Monday highs $117 to $120, larger channel top

Support Levels

• $98 to $100 pivot, 4H 200-period MA, short-term bearish below
• Momentum support $93 to $95
• $90 psychological level and past session's lows
• $87 to $90 mini-support
• $82 Friday 17 lows
• 2025 highs key support $78 to $80

1H Chart and Action Levels

WTI Oil 1H chart. Source: TradingView, May 20, 2026.

Bulls are stepping back aggressively, as the narrative of a compromised deal continues to fuel intraday rallies.

The 50-hour MA has just been breached, but it could still weigh on the price action, hence traders will want to keep a close eye on it, with a 4H close for confirmation.

Mean-reversion traders will want to see either rejection here or at the upper resistance lines drawn from the triangle and broken channel formations.

Safe trades and keep your eyes on the news.

US business activity expanded modestly in May as strong manufacturing output continued offsetting softer services demand, though survey data increasingly pointed to a more uncomfortable mix of slowing growth and rising inflation pressures. Flash US Composite PMI Output Index held unchanged at 51.7, while Services PMI Business Activity Index eased slightly from 51.0 to 50.9, a two-month low. In contrast, manufacturing activity strengthened further, with Manufacturing PMI rising from 54.5 to 55.3 and Manufacturing Output Index climbing to 56.2, its highest level in 49 months.

According to S&P Global’s Chris Williamson, the latest data suggest the economic fallout from the Middle East conflict is becoming increasingly visible across US businesses. “Demand was again squeezed by a further spike in prices and jobs were cut as firms worried over rising costs and the economic outlook,” Williamson said. While the economy still appears on track for positive growth in the second quarter, the PMI surveys point to annualized GDP growth struggling to exceed 1%. Williamson also warned that recent manufacturing strength has been partly supported by precautionary stockpiling amid fears of further price increases and supply chain disruptions — support that may fade once inventories are rebuilt.

More concerningly for the Federal Reserve, inflation pressures accelerated further even as demand softened. Williamson noted that firms’ costs are now rising at the fastest pace since the 2022 energy shock and that businesses are increasingly passing those higher costs through to consumers via “sharply higher selling prices.” The combination of slowing order growth, weakening demand, and rising inflation risks reinforces the stagflationary undertone increasingly shaping the US economic outlook as policymakers weigh whether rates may need to stay restrictive for longer.

Full US PMI flash release here.

Forex markets remained trapped within yesterday's ranges as investors struggled to find fresh conviction amid conflicting signals surrounding the US-Iran conflict. While there was some brief improvement in risk sentiment after US President Donald Trump said Washington was in the “final stages” of negotiations with Iran, optimism faded quickly as no concrete breakthrough emerged from either side officially.

But the optimism faded quickly after Reuters reported that Iran’s supreme leader Mojtaba Khamenei had directed officials to keep enriched uranium inside the country — a move likely to complicate any final agreement substantially.

The oil market remains the key macro driver. International Energy Agency Executive Director Fatih Birol warned on Thursday that global oil markets could soon enter a “red zone” during July or August if the Strait of Hormuz is not fully reopened before summer demand accelerates.

According to Birol, the IEA has already been injecting roughly 2.5 to 3 million barrels per day from strategic reserves to offset supply disruptions, but stressed that emergency stockpiles “are not endless.” With commercial inventories already declining rapidly and global demand set to rise during the northern hemisphere travel season, concerns are shifting away from pure geopolitical risk pricing toward fears of outright physical supply tightness.

Those concerns continued capping broader risk appetite across markets. Brent crude climbed back above %106 after earlier declines, while US 10-year Treasury yield rebounded to 4.60%, keeping financial conditions tight globally. Gold also softened again and drifted back toward the 4,500 area.

In currency markets, Sterling is the strongest performer of the week so far as immediate fears surrounding UK politics and fiscal instability eased. Kiwi followed, while Dollar also stayed relatively firm amid elevated yields.

On the weaker side, Yen continued suffering under the weight of rising global yields, while Aussie is pressured after weak employment data reinforced expectations that the RBA will hold rates steady in June. Euro also underperformed following weak PMI data and lingering uncertainty over whether ECB tightening will continue near term.

The market’s problem now is credibility. Traders do not appear willing to fully trust optimistic geopolitical headlines unless they are accompanied by concrete progress on reopening the Strait of Hormuz and stabilizing physical oil supply. Until then, every temporary recovery in sentiment risks running into the same structural obstacle: tightening energy markets and rising global yields.

US initial jobless claims fall to 209k, labor market remains resilient

US weekly jobless claims stayed near low levels in May, reinforcing the view that the labor market remains resilient despite broader signs of slowing economic momentum. Read More.

GBP/CHF Rebounds as UK Fiscal Worst-Case Fears Fade, Head-and-Shoulders Bottom Forming?

Sterling rebounded as markets stepped back from pricing a UK fiscal crisis after Andy Burnham reassured investors on fiscal discipline, while GBP/CHF began forming a potential bullish reversal pattern. Read More.

UK PMI Composite Falls Into Contraction as BoE Faces “Major Quandary”

UK business activity fell back into contraction in May as collapsing services demand, rising energy costs, and growing political uncertainty left the Bank of England facing a “major quandary.” Read More.

Eurozone PMI Composite Falls to 31-Month Low, Signals -0.2% Q2 GDP Contraction

Eurozone business activity deteriorated sharply in May as the Composite PMI fell to a 31-month low, with survey data signaling a potential 0.2% contraction in Q2 GDP amid deepening energy-shock pressures. Read More.

Aussie Rebound Runs Into Domestic Reality as Weak Jobs Lock In RBA June Hold

AUD/USD’s relief rally faded quickly after weak Australian jobs data effectively locked in an RBA hold for June, reinforcing concerns that cracks are forming in the domestic economy. Read More.

Australia Employment Unexpectedly Contracts as Unemployment Rate Jumps to 4.5%

Australia’s labor market weakened sharply in April as employment unexpectedly contracted and unemployment jumped to 4.5%, strengthening expectations that the RBA will stay cautious near term. Read More.

Australia PMIs Fall Back Into Contraction as Demand and Confidence Deteriorate

Australia’s private sector fell back into contraction in May as weakening demand, softer hiring, and elevated energy costs pushed business confidence toward pandemic-era lows. Read More.

BoJ’s Koeda Says Oil-Driven Inflation Risks Could Justify Further Rate Hikes

BoJ board member Junko Koeda warned the Middle East oil shock could push Japan’s underlying inflation above target, strengthening the case for further rate hikes as early as June. Read More.

Japan PMI Growth Slows as Manufacturing Strength Offsets Stagnating Services Sector

Japan’s economic expansion slowed in May as services activity stagnated and cost pressures surged, though manufacturing continued benefiting from stockpiling tied to Middle East supply disruptions. Read More.

GBP/USD Daily Outlook

No change in GBP/USD's outlook and intraday bias stays neutral. Further fall is expected as long as 55 4H EMA (now at 1.3450 holds. Below 1.3300 will target a retest on 1.3158 support first. However, sustained break of the EMA will dampen the bearish case and turn bias back to the upside for 1.3657 resistance instead.

In the bigger picture, current development suggests that price actions from 1.3867 are merely a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is in favor for a later stage, towards 1.4248 key resistance (2021 high). However, firm break of 1.3008 will at least bring deeper fall to 38.2% retracement of 1.0351 to 1.3867 at 1.2524, with increased risk of bearish reversal.

US initial jobless claims edged lower by -3k to 209k in the week ending May 16, slightly below expectations of 210k and consistent with a labor market that remains relatively resilient despite slowing economic momentum elsewhere. Four-week moving average of initial claims also declined by -1.5k to 202.5k, suggesting layoffs remain contained overall.

Continuing claims, however, rose modestly by 6k to 1.782m in the week ending May 9, indicating some unemployed workers may still be finding it harder to secure new jobs quickly. Even so, four-week moving average of continuing claims fell by -6.5k to 1.773m, pointing to broadly stable labor market conditions.

Full US jobless claims release here.

Intraday bias in EUR?USD stays neutral at this point. As noted before, rebound from 1.1408 could have completed as a corrective three-wave move. Deeper fall should be seen to retest 1.1408 low. For now, risk will stay on the downside as long as 55 4H EMA (now at 1.1659) holds.

In the bigger picture, the strong support from 38.2% retracement of 1.0176 to 1.2081 at 1.1353 suggests that the pullback from 1.2081 is more likely a corrective move. Strong support was also found in 55 W EMA (now at 1.1542). Focus is back on 1.2 key cluster resistance level. Decisive break there will carry long term bullish implications. Nevertheless, break of 1.1408 support will revive the case of medium term bearish trend reversal.

Intraday bias in USD/JPY remains neutral at this point. Above 159.24 will target 160.71 high. Strong resistance is expected from there to start the third leg of the near term corrective pattern. On the downside, break of 157.30 support will turn bias to the downside for retesting 155.01.

In the bigger picture, for now, corrective pattern from 161.94 (2024 high) is still seen as completed at 139.87. Rise from there is seen as resuming the long term up trend. So, break of 161.94 is expected at a later stage to resume the long term up trend. However, sustained break of 55 W EMA (now at 154.36) will dampen this view and bring deeper fall back towards 139.87 to extend the pattern from 161.94.

No change in GBP/USD's outlook and intraday bias stays neutral. Further fall is expected as long as 55 4H EMA (now at 1.3450 holds. Below 1.3300 will target a retest on 1.3158 support first. However, sustained break of the EMA will dampen the bearish case and turn bias back to the upside for 1.3657 resistance instead.

In the bigger picture, current development suggests that price actions from 1.3867 are merely a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is in favor for a later stage, towards 1.4248 key resistance (2021 high). However, firm break of 1.3008 will at least bring deeper fall to 38.2% retracement of 1.0351 to 1.3867 at 1.2524, with increased risk of bearish reversal.

Intraday bias in USD/CHF is turned neutral again with current retreat. Further rise is in favor as long as 0.7837 support holds. Firm break of 0.7923 resistance will argue that fall from 0.8041 has completed as a three wave correction, and bring further rise to retest this high. However, break of 0.7837 will turn bias back to the downside for 0.7760 support instead.

In the bigger picture, as long as 55 W EMA (now at 0.8035) holds, fall from 0.9200 is expected to continue, as part of the larger down trend. Firm break of 0.7603 will target 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382.

Intraday bias in AUD/USD remains neutral for the moment. On the upside, above 0.7183 minor resistance will suggest that pullback from 0.7277 has completed. Intraday bias will be back on the upside for retesting this high. However, decisive break of 0.7076 will bring deeper decline back towards 0.6832 support.

In the bigger picture, rise from 0.5913 (2024 low) is still in progress. Decisive break of 61.8% retracement of 0.8006 to 0.5913 at 0.7206 will solidify the case that it's already reversing the down trend from 0.8006 (2021 high). Further rally should then be seen to retest 0.8006. For now, outlook will remain bullish as long as 0.6832 support holds, in case of pullback.