Japan’s Inflation Slows, Yields Rise (05.22.2026)

Japan’s 10-year government bond yield held near 2.78% on Friday, close to a three-decade high, even after softer inflation reduced expectations for an imminent Bank of Japan rate increase. 

Core inflation slowed to 1.4% in April from 1.8% a month earlier, marking its lowest level in four years and remaining below the BoJ’s 2% target for a third consecutive month.

The US 10-year Treasury yield steadied around 4.57% after two days of declines, while the dollar index remained near a six-week high at 99.2. Signals from US-Iran negotiations left uncertainty around inflation and the interest-rate outlook, although Iranian officials said the latest US proposal had narrowed some differences between the two sides.

Europe’s Recovery Stumbles Again

The euro drifted back toward 1.16 after fresh PMI figures painted a weaker picture of the Eurozone economy. Business activity contracted at its fastest pace since late 2023, with higher living costs weighing on consumer spending and service-sector demand.

Rising input costs added another challenge, pushing inflation pressures higher and raising concerns that price growth could move closer to 4% in the months ahead.

For EUR/USD, the initial resistance is seen at 1.1660, while the closest support is positioned at 1.1550.

Diplomacy Offers Hope for Gold

Gold remained above $4,500 as conflicting headlines from Washington and Tehran left the market searching for direction. Iranian officials suggested recent proposals had narrowed some differences, but reports that enriched uranium stockpiles would remain inside the country complicated hopes for a final agreement.

Markets also eyed reports that Iran is discussing a permanent toll system in the Strait of Hormuz with Oman, a move opposed by President Trump. Despite recent stability, gold remains below levels seen before the conflict, as persistent inflation concerns continue to fuel expectations that central banks may keep monetary policy restrictive.

First resistance is seen at $4550, with initial support near $4400.

Softer Inflation Takes Pressure Off the BOJ

The yen drifted toward 159 per dollar and moved closer to a second consecutive weekly loss after inflation data weakened the case for immediate policy action. Core inflation slowed to 1.4% in April, the lowest reading in four years and the third straight month below the Bank of Japan’s 2% target.

The figures reduced expectations for a near-term rate increase, leaving the currency without a strong catalyst for recovery.

Initial resistance stands at 160.00, while the first support is located at 158.20.

Britain’s Growth Streak Comes to an End

Sterling held near 1.343 even as fresh PMI data showed the UK economy slipping into contraction during May, ending a year-long expansion streak. Businesses reported softer demand, rising cost pressures, supply disruptions, and job cuts, reflecting the economic fallout from regional tensions and domestic uncertainty.

The figures followed softer inflation data and signs of cooling labour-market conditions, reinforcing concerns about the strength of the UK economy.

From a technical view, resistance stands near 1.3430, with support around 1.3340.

Silver Marks Time as Talks Continue

Silver stayed above $76 and headed for a largely unchanged week as developments in US-Iran negotiations continued to shift the outlook for inflation and interest rates.

Officials on both sides pointed to areas of progress, but disagreements surrounding Iran’s uranium reserves remained a major obstacle. With no clear resolution in sight, precious metals balanced hopes for diplomacy against the risk of renewed tensions.

From a technical view, resistance stands near $75.70 while support is located around $72.50.