The AI Rally Faces Its Next Test (05.18.2026)

US stock futures slipped while attention turned to Nvidia earnings and upcoming results from Walmart and Target for a clearer read on AI momentum and consumer spending.

Bond markets extended their climb on both sides of the Pacific. Japan’s 10-year yield reached a 29-year high near 2.8% as higher energy costs and yen weakness strengthened expectations of a Bank of Japan rate hike. In the US, the 10-year Treasury yield climbed to around 4.63%, its highest since early 2025, as markets increasingly considered the possibility of another Fed hike.

The stronger rate outlook also kept the dollar in demand, with the dollar index rising above 99.3 to a six-week high before upcoming PMI data and further Fed commentary.

Dollar Strength Pressures EUR/USD

EUR/USD moved lower toward the 1.1620 region as dollar demand stayed firm on rising oil prices, Middle East tensions, and expectations that the Federal Reserve could keep rates restrictive for longer.

The euro continued to face pressure from weak Eurozone growth and persistent regional uncertainty, leaving the pair with limited momentum for recovery.

For EUR/USD, the first resistance is located at 1.1770, while initial support stands near 1.1610.

Bullion Cracks Under Inflation Weight

Gold fell below $4,550 per ounce, extending last week’s sharp decline as the stronger dollar and rising Treasury yields continued to weigh on prices.

US inflation data came in stronger than expected, supported partly by higher energy costs tied to Middle East disruptions, reinforcing expectations that the Fed may keep policy tight for longer. Concerns surrounding stalled US–Iran negotiations and attacks on regional energy infrastructure also kept uncertainty high.

The first resistance is seen at $4,580, while initial support stands near $4,500.

USD/JPY is Back in the Danger Zone

The yen weakened toward 159 per dollar, marking a sixth straight daily loss as expectations of tighter Federal Reserve policy continued lifting the US dollar. Rising energy prices linked to Middle East tensions added to inflation concerns, while stalled US–Iran negotiations kept pressure on market sentiment.

With USD/JPY approaching the 160 level once again, attention is turning back to the possibility of intervention from Japanese authorities.

Initial resistance stands at 160.00, while the first support is located at 156.80.

GBP/USD Searches for Direction

GBP/USD traded with mixed momentum as near-term technical support helped stabilize the pair despite broader weakness over the longer term.

Sterling continued to react to fluctuations in dollar strength, UK economic conditions, and shifting rate expectations, leaving the pair sensitive to incoming macroeconomic signals.

From a technical view, resistance stands near 1.3340, with support around 1.3300.

Silver Dragged into a Deeper Pullback

Silver dropped below $75 per ounce, marking a third consecutive daily decline as stronger inflation pressures and tighter policy expectations weighed on sentiment. The metal also faced pressure from a firmer dollar and higher Treasury yields after stronger US inflation data reduced hopes for Fed easing.

Additional weakness followed UBS lowering its silver demand forecast, pointing to softer industrial demand and improving supply expectations.

From a technical view, resistance stands near $76.30 while support is located around $72.50.