Dear Trader,

Market Overview & Key Events

The week of May 11–15 arrives with global risk appetite on a knife-edge. Last week’s NFP badly missed consensus — the US unemployment rate ticked up to 4.3% — reinforcing expectations for Fed rate cuts later in 2026 and sparking sharp USD weakness. Equity markets digested the data with volatility, as the DE40 fell hard from the 25,000 area before stabilising mid-week. As we enter a new week, several major catalysts threaten to trigger decisive directional breaks across all three instruments.

The single most important event of the week is the Trump–Xi Summit in Beijing on May 14–15, the first US presidential visit to China since 2017. Markets are pricing in modest optimism — further tariff de-escalation, symbolic investment commitments, and potentially renewed access to critical minerals — but analysts warn outcomes are likely to fall short of a comprehensive deal. Any positive surprise (a formal trade framework, rare earth access agreement) would be a significant risk-on catalyst for equities and EUR/USD, and a headwind for gold. A breakdown or disappointment would have the opposite effect.

Equally critical is the US CPI release for April on Tuesday, May 13 (8:30 AM ET). With the prior reading at +3.3% y/y and headline MoM at +0.2%, any significant deviation will directly reprice Fed rate-cut expectations. A softer CPI print would accelerate USD selling, pushing EUR/USD and gold higher while supporting the DE40’s international earnings component. A hotter-than-expected print could trigger a swift USD snap-back and reset the narrative.

Key Events Calendar

On the geopolitical side, the Strait of Hormuz blockade continues to weigh on global energy supply chains, keeping inflation expectations elevated and gold’s safe-haven bid intact. Any progress toward reopening — China has reportedly signalled influence over Iran in this regard — would be a meaningful downside risk for gold and upside for risk assets.

1. Germany 40 (DE40) — Bearish Correction Within a Longer Uptrend

Technical Landscape

The 4-hour chart paints a picture of a sharp corrective move. After peaking near the 25,000–25,100 area in the first week of May, the DE40 has dropped aggressively, breaking back below the MA ribbon. The 9 EMA (yellow) has crossed decisively below the 18 EMA (black), with the black 18 EMA now rolling over and pointing lower — a clear bearish signal on this timeframe. Price is currently attempting to stabilise near 24,276, which coincides with the horizontal shelf from late April and early May consolidation.

Zooming into the 1-hour chart, the picture is equally concerning for bulls in the near term. The index found a low around 23,800–23,850 during a sharp sell-off earlier in the week, bounced sharply to re-test the 24,900 region, and has since rolled over again. Both EMAs are now in a bearish configuration on the 1-hour, sloping lower, with price chopping just below them. A series of lower highs has formed. There is no bullish crossover signal on either timeframe as we enter the new week.

Most Likely Bias: Bearish / Corrective

The bias is bearish to neutral for the week. The sharp rejection from the 25,000 area and the current MA ribbon configuration favour further downside pressure, at least into the 24,000–24,100 area. However, the longer-term structural uptrend from the April lows remains intact as long as the 23,500–23,700 zone holds. A bullish reversal would require a reclaim of the 24,500–24,600 area with both EMAs turning higher.

Key Levels to Watch

Resistance - 24,450–24,500 — immediate overhead; where the MA ribbon sits and previous intraday highs cluster. A decisive 4h close above here is needed to shift bias. - 24,750–24,800 — structural swing high area, mid-May congestion zone. - 25,000–25,100 — the major resistance that triggered the current sell-off; likely capped for the week.

Support - 24,100–24,200 — near-term support; multiple 1h wicks and body closes from late April. First meaningful demand zone. - 23,850–23,900 — the recent 1h swing low; a break here opens the door to further downside. - 23,650–23,700 — significant structural support (prior consolidation lows, April base); critical for the medium-term bullish case.

Trade Ideas

Idea 1 — Bearish (Primary Scenario)

Wait for a failed re-test of the 24,450–24,500 zone. Look for a 1-hour bearish rejection candle (e.g. shooting star, bearish engulfing) below the MA ribbon with both EMAs sloping lower.

• Entry: Sell on confirmation near 24,400–24,450
• Target 1: 24,100 · Target 2: 23,850 · Extended: 23,650 if momentum accelerates
• Stop-Loss: Above 24,650 (above the ribbon)
• Rationale: The MA ribbon has flipped bearish on both the 4h and 1h. Selling rallies into resistance is the high-probability play until structure dictates otherwise. A weak CPI print or positive Trump–Xi headlines would be the main risk to this trade.

Idea 2 — Bullish Reversal (Alternative Scenario)

A confirmed bounce from the 23,850–24,100 support zone, ideally following a positive CPI surprise (soft inflation) or strong Trump–Xi trade headlines. Entry requires a 1-hour close back above 24,300 with both EMAs turning higher.

• Entry: Buy on the 1h close above 24,300, or a limit entry near 23,900 with a confirming candlestick
• Target 1: 24,500 · Target 2: 24,750
• Stop-Loss: Below 23,700
• Rationale: The longer-term uptrend remains intact. A fundamental catalyst (risk-on event) could lead to a sharp recovery, similar to the bounce seen in late April.

Idea 3 — Range / Neutral Strategy

Play the 24,100–24,500 range with small size ahead of the Trump–Xi summit and CPI. The event risk is high enough that fighting a directional trend could be costly. Fade extremes within the range using short-term oscillator divergence on the 1h, keeping stops tight and scaling down position size ahead of Tuesday (CPI) and Wednesday–Thursday (summit + PPI + Retail Sales).

2. EUR/USD — Bullish Momentum Testing Major Resistance

Technical Landscape

On the 4-hour chart, EUR/USD has staged a powerful recovery from the 1.1630 lows seen in late April. Price has rallied sharply back into the 1.1700–1.1800 area, with the 9 EMA (yellow) having crossed back above the 18 EMA (black) — a bullish crossover that confirms the recovery momentum. However, both EMAs are now beginning to flatten as price chops around the 1.1760–1.1800 zone, suggesting a potential pause or consolidation before the next move.

The 1-hour chart tells a story of a sharp move up to the 1.1790–1.1800 area, followed by a pullback to re-test the 1.1740–1.1750 zone, and a second push back toward 1.1800. The MA ribbon is in a short-term bullish posture, with both EMAs pointing higher, but the momentum is slowing. Price is effectively coiling between 1.1740 and 1.1800 ahead of this week’s key data. The pair currently trades around 1.1770.

Most Likely Bias: Bullish with Caution

The bias is moderately bullish but with important caveats. The structural recovery from 1.1630 and the bullish MA crossover on the 4h are constructive signals. However, the pair is approaching major technical resistance at 1.1800–1.1820, and the ECB’s stance has been increasingly hawkish relative to a Fed that is being priced to cut. A softer US CPI print this Tuesday would be the catalytic fuel needed to push EUR/USD through 1.1800 convincingly. A hotter-than-expected print would trigger a sharp pullback toward 1.1650.

Key Levels to Watch

Resistance - 1.1790–1.1800 — immediate barrier; multiple candle wicks on both the 4h and 1h. This is the line in the sand for bulls this week. A 4h close above 1.1800 would be a strong breakout signal. - 1.1840–1.1850 — structural resistance from April highs; first significant target on a breakout. - 1.1920–1.1950 — multi-month resistance; medium-term target if the USD weakens significantly on CPI + summit outcomes.

Support - 1.1740–1.1750 — near-term pivot; the recent 1h pullback low. Holding here on CPI day is important for bulls. A break below shifts short-term momentum back to neutral. - 1.1690–1.1700 — critical near-term support; a close below this level on the 4h would invalidate the bullish view. - 1.1620–1.1640 — the April swing lows; major structural demand zone and the ultimate stop-loss reference for medium-term long positions.

Trade Ideas

Idea 1 — Bullish Breakout (Primary Scenario)

Wait for a 4-hour close above 1.1800, ideally following a soft US CPI print on Tuesday morning. The entry confirmation is a 1h candle body close above 1.1800 with both EMAs rising.

• Entry: Buy on a pullback to 1.1790–1.1800 (now acting as support) after the breakout, or on the initial 4h close above 1.1800
• Target 1: 1.1850 · Target 2: 1.1920
• Stop-Loss: Below 1.1720 (below the MA ribbon)
• Rationale: A weak inflation reading combined with ongoing ECB hawkishness would widen the monetary policy divergence narrative strongly in the euro’s favour, targeting a breakout from the multi-week range. Positive Trump–Xi trade headlines reducing USD safe-haven demand would be an additive catalyst.

Idea 2 — Bearish Reversal (Alternative Scenario)

If US CPI comes in hotter than expected, or if the Trump–Xi summit fails to deliver meaningful progress (triggering risk-off), look for EUR/USD to reverse sharply from the 1.1790–1.1800 resistance. Confirmation is a 4h bearish close back below 1.1740.

• Entry: Sell on a confirmed 1h close below 1.1740, or a short from the 1.1790 area with a bearish rejection candle
• Target 1: 1.1690 · Target 2: 1.1640
• Stop-Loss: Above 1.1820
• Rationale: A failure to break above 1.1800 on the back of positive sentiment would represent a classic resistance rejection and could trigger a deeper pullback as short-term momentum traders square long positions.

Idea 3 — Range Strategy (Pre-CPI)

In the hours before CPI on Tuesday morning, the pair is likely to consolidate between 1.1740 and 1.1800. Fade the extremes of this range with very tight stops (no wider than 20–25 pips), keeping size minimal. Avoid initiating new directional positions within 2 hours of the CPI release. Let the dust settle — then trade the confirmed direction.

3. XAU/USD (Gold) — Rebound Attempt After Deep Correction

Technical Landscape

Gold’s 4-hour chart reveals a dramatic story. After peaking near the 4,900 area in mid-April, the metal underwent a sharp and sustained correction all the way to the 4,510–4,520 zone by the end of April / early May — a drop of nearly $400. Since then, price has staged a meaningful recovery, rallying back above 4,700 and reaching as high as 4,760 during the first week of May. The 9 EMA (yellow) has crossed back above the 18 EMA (black) on the 4-hour chart, suggesting the immediate downward pressure has eased. Both EMAs are pointing higher, and price is consolidating just below the moving averages near 4,675.

On the 1-hour chart, gold pushed to the 4,760 area and has since pulled back to the current 4,674 region. The MA ribbon is beginning to roll over on the 1-hour timeframe — the 9 EMA has crossed below the 18 EMA — signalling that a short-term corrective phase is under way within what could still be a larger medium-term recovery. The consolidation between 4,650 and 4,720 is the battle zone for the near term.

Most Likely Bias: Short-Term Range / Medium-Term Bullish

The bias is a short-term range / corrective phase within a medium-term recovery. The deep sell-off from 4,900 to 4,510 appears to have found a base, and the 4h bullish EMA crossover is encouraging. However, gold faces significant headwinds this week: a potential positive Trump–Xi trade outcome and falling inflation expectations are both negative for the traditional safe-haven. The 4,650–4,720 range is likely to contain price action ahead of Thursday’s data barrage. CPI on Tuesday is the first major trigger — a soft number would be gold-supportive (USD weakness), while a hot number would test the 4,600–4,620 support.

Key Levels to Watch

Resistance - 4,720–4,740 — the upper boundary of the current 1h consolidation and where the 18 EMA sits on the 4h chart. A 4h close above here confirms recovery continuation. - 4,760–4,780 — the recent swing high; a decisive close above this area would signal a test of the 4,850–4,900 supply zone. - 4,850–4,900 — the major overhead supply zone from the mid-April peak; medium-term target only on strong fundamental tailwinds.

Support - 4,650–4,660 — the near-term pivot, where several 1h candles have found buyers. Loss of this level likely triggers a test of the zone below. - 4,600–4,620 — key support; a 4h close below this level would re-open the door to the 4,540–4,510 lows. - 4,510–4,540 — the April/May swing low and major structural support. This would represent a high-probability long entry zone if tested again.

Trade Ideas

Idea 1 — Bullish Continuation (Primary Scenario)

A hold above 4,650 followed by a confirmed 4-hour close above 4,720, ideally triggered by a soft CPI print or ongoing geopolitical tensions (Strait of Hormuz, any Middle East escalation).

• Entry: Buy on a pullback to 4,660–4,680 after the 4h close above 4,720, with both 4h EMAs pointing higher
• Target 1: 4,760 · Target 2: 4,850
• Stop-Loss: Below 4,620
• Rationale: The medium-term uptrend in gold is structurally intact. The 4h bullish EMA crossover after a deep correction signals a potential recovery leg. USD weakness on soft CPI and persistent geopolitical risk are the catalysts.

Idea 2 — Bearish Pullback (Alternative Scenario)

A break below 4,650 on the back of a hot CPI print, a strong positive outcome from the Trump–Xi summit (reducing safe-haven demand), or a Strait of Hormuz de-escalation announcement. Confirmation requires a 4h close below 4,640.

• Entry: Sell on a 1h close below 4,640, or on a re-test of 4,650–4,660 as resistance after the break
• Target 1: 4,600 · Target 2: 4,540
• Stop-Loss: Above 4,720
• Rationale: The 1h EMA ribbon has already flipped bearish. A fundamental shift reducing safe-haven demand alongside a recovering USD would apply pressure to gold and extend the corrective leg downward.

Idea 3 — Buy the Dip at Major Support

If gold sells off aggressively toward the 4,510–4,540 zone — whether from a hot CPI, a strong trade deal, or geopolitical de-escalation — this represents the highest-probability medium-term long entry. Look for a daily bullish reversal candle (pin bar, hammer, morning star) at or near 4,510–4,540.

• Entry: Limit buy at 4,530 or market entry on confirmed bullish reversal candle
• Target 1: 4,650 · Target 2: 4,750 · Extended: 4,850 if the medium-term uptrend resumes
• Stop-Loss: Below 4,470
• Rationale: This level acted as structural support on multiple tests and represents a deep discount within the broader 2026 gold bull trend. The risk/reward on a bounce from here is highly favourable.

Risk Considerations

Trump–Xi Summit (May 14–15, Beijing): The most binary macro risk of the week. A positive outcome — even a partial tariff reduction or symbolic investment agreement — would trigger a broad risk-on move: DE40 higher, EUR/USD higher, gold lower. A breakdown or absence of meaningful progress could reverse all three in the opposite direction simultaneously. Do not hold large positions naked into this event.

US CPI — Tuesday, May 13: The first major scheduled data release of the week. The market expects modest disinflation continuation. A significant surprise in either direction will be the primary driver of Tuesday’s and potentially Wednesday’s price action across all three instruments. Consider reducing position size to 50% before the release and adding on confirmation.

Fed Speeches: Multiple Federal Reserve governors are scheduled to speak throughout the week (Waller, Bowman, Cook, Barr). Any shift in tone — particularly pushback on rate cut expectations following last week’s weak jobs data — could trigger sharp intraday moves, especially in EUR/USD and gold.

Strait of Hormuz / Middle East: Any confirmed ceasefire progress, or conversely any escalation in the Iran situation, will have an outsized effect on gold and global risk sentiment. Monitor geopolitical newswires closely, particularly around the Trump–Xi summit window, as China has reportedly positioned itself as an intermediary with Iran.

Summary Outlook

Trading strategy for the week: the event risk is clustered on Tuesday (CPI), Wednesday–Thursday (summit + PPI + Retail Sales). Enter positions with smaller-than-normal size ahead of these releases, and let the market reveal its hand before committing fully. The DE40 is the cleanest short candidate while below the MA ribbon and 24,450. EUR/USD is the cleanest long on a 4h breakout above 1.1800. Gold is a range trade between 4,650 and 4,720 until a catalyst tips the balance — with the highest-conviction play being a buy near 4,510–4,540 if that level is reached.

Stay disciplined. Trade the chart, not the headline.— The FX Hermes Team

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Risk Disclaimer

This Weekly Market Outlook is for educational and informational purposes only. It does not constitute financial advice, investment recommendation, or trading signal. All scenarios and probabilities are estimates based on technical analysis and are subject to change. Trading leveraged instruments carries substantial risk of loss. Always use appropriate position sizing, stop losses, and risk management. Consult a licensed financial advisor before making investment decisions. Past performance is not indicative of future results.