Dear trader,

The week of May 25–29 was one of the most event-compressed of the month — and it delivered on that billing in every direction. Three distinct macro forces ran simultaneously, often pulling against each other: the Iran/Hormuz negotiation arc, a freshly hawkish FOMC minutes release, and a PCE inflation print that confirmed the stagflation thesis markets had been dreading. Add thin Monday liquidity courtesy of Memorial Day, and the result was a week defined less by clean directional trends and more by intraweek whipsaws that rewarded patience and punished conviction held across sessions.

We entered the week with a cautiously bullish DE40, a bearish-with-a-bounce EUR/USD, and a short-term bearish / range-bound gold — with explicit warnings that thin Monday liquidity and the Iran headline risk were the primary variables capable of overriding the technical setups. All three played out closer to that nuanced framing than any single directional call. Here is the full accounting of how each instrument performed against our published scenarios.

1. Germany 40 (DE40) — Resistance Held, Then Iran Delivered the Friday Close

Verdict: Partial — Idea 1 partially triggered; Idea 3 did not clear; the week ended constructively but below the breakout level

The Outlook

We entered the week with the DE40 pressing against short-term resistance at 25,150–25,200, having rallied aggressively from the 23,750 lows of May 18. The 4h ribbon was in a clean bullish configuration. The primary scenario — Idea 1 — called for waiting for a Memorial Day-thinned dip into the 24,700–24,850 zone and buying the 4h ribbon on 1h bullish confirmation, targeting 25,100 and 25,200. Idea 2 was a bearish reversal below 24,900 on a hawkish FOMC or Iran escalation shock. Idea 3 was a breakout above 25,200 on a 4h close, targeting 25,400–25,500. We flagged that chasing Friday’s highs was the primary risk to avoid, and that the Memorial Day session would “often produce an initial dip before the US session joins properly on Tuesday.”

What Happened

The week opened exactly as that caveat described. Monday’s thin session — European-only liquidity with US markets closed — produced a brief dip in the DE40 from the 25,150 area. Price pulled back toward the 24,900–25,000 zone intraday, providing a brief window for the Idea 1 entry, though the move was shallow and the 4h ribbon held well above the 24,700 level we had identified as the primary pullback target. Traders who set alerts at the upper end of the Idea 1 zone (24,850) found the opportunity. Traders waiting for a deeper test of 24,700 were not filled.

Tuesday’s reopening of the US session brought a recovery, and the index oscillated in the 24,950–25,150 range through mid-week as markets awaited the FOMC Minutes. Wednesday’s release — the April 28–29 minutes — delivered a hawkish shock: three distinct camps emerged from the transcripts, with an openly hawkish faction discussing whether rate hikes rather than cuts should be the next policy move. The initial market reaction was a risk-off dip, and the DE40 slid back toward the 24,800–24,850 area on Wednesday afternoon — retesting the upper boundary of our Idea 1 zone a second time and offering a cleaner entry for disciplined buyers who had kept the level on watch.

The pivotal session arrived Thursday. PCE data — the Fed’s preferred inflation gauge — came in hotter than expected, printing above consensus for the core reading, reinforcing the stagflation narrative and providing a further headwind for equities. The DE40 dipped sharply on the number, testing 24,700 intraday, before recovering as the Iran negotiation arc dominated the afternoon narrative. Reports emerged of a preliminary MOU framework between the US and Iran, including a proposed 60-day ceasefire extension and discussion of reopening the Strait of Hormuz. European equities — the DE40 in particular — attracted significant safe-haven-to-risk rotation flows on the back of Iran optimism, as a resolution of the supply shock would disproportionately benefit energy-import-dependent European economies.

Friday’s close confirmed the constructive structure: the DE40 finished the week at approximately 25,113, having recovered from the intraweek PCE-driven lows and ending May up 3.4% on the month. The 25,200 breakout trigger from Idea 3 was never achieved on a 4h closing basis — price approached but did not sustain above the level — and the week ended just below the prior resistance zone.

Trade Performance

Idea 1 (buy the dip at 24,700–24,850) offered two opportunities during the week — Monday’s thin-session dip to 24,900 and Wednesday’s post-FOMC dip to 24,800–24,850. The first test was shallow and did not reach the full zone; the second was cleaner and better aligned with the 1h confirmation criteria. Traders who engaged on the second test targeting 25,100 found the move delivered. Target 1 at 25,100 was reached. Target 2 at 25,200 was approached but not cleanly cleared. A partial result — the framework worked, but the extended target at 25,400 required Idea 3’s breakout, which did not materialise.

Idea 2 (the bearish reversal below 24,900) was briefly live following the hawkish FOMC Minutes on Wednesday and the hot PCE print on Thursday. The index did dip below 24,900 intraday on both occasions, but the 1h bearish close confirmation that our framework required was not cleanly produced — the recoveries were fast, driven by the Iran deal narrative. Disciplined traders following the confirmation requirement avoided a short that would have been stopped out on the Iran-driven recovery. No confirmed entry, no loss — but also no participation on the counter.

Idea 3 (breakout above 25,200) did not trigger. Despite Friday’s constructive close at 25,113, the index never produced a 4h close above 25,200. The level remains the key bull/bear dividing line heading into the next week.

The DE40 this week is a lesson in the value of the two-entry design embedded in Idea 1: the first test (Monday) was marginal, the second test (Wednesday) was clean. Both opportunities arose from the same pre-defined zone. Traders who waited for the 4h ribbon to provide the entry — rather than chasing the mid-week levels — were rewarded with defined-risk entries into the Iran-recovery bounce.

2. EUR/USD — The Bounce Delivered, Then the FOMC Capped It

Verdict: Win — Idea 1 triggered and Target 1 reached; the pair behaved precisely as the bearish-with-a-bounce framing described

The Outlook

Our EUR/USD bias was bearish on the 4h but with a live near-term bounce in play from tariff-driven USD weakness. The primary scenario — Idea 1 — called for selling the 1h rejection at 1.1680–1.1700, targeting 1.1600 and 1.1550, with an extended target at 1.1500 on a hawkish macro outcome. Idea 2 was a bullish breakout above the 4h ribbon at 1.1740 on a dovish catalyst. Idea 3 was a range fade between 1.1580 and 1.1700 ahead of the FOMC Minutes, with flat positioning ahead of the release. We entered with the pair at approximately 1.1638, already in the early stages of the short-term bounce, and flagged 1.1680–1.1700 as “the first real test for the current bounce.”

What Happened

The week played out in near-perfect alignment with the Idea 1 framing. Monday’s thin session produced a continuation of Friday’s tariff-driven bounce, with EUR/USD pushing from the 1.1638 area toward the 1.1650–1.1660 zone in the European session. Through Tuesday and into Wednesday morning, the pair crept higher — aided by US dollar softness in the absence of US market participants on Monday — and tested the 1.1680 zone on multiple occasions.

Wednesday’s FOMC Minutes were the turning point. The three-camp framework that emerged — with an openly hawkish faction discussing rate hikes — delivered precisely the USD-supportive catalyst that our Idea 1 framing had identified as the “more durable structural force” versus the tariff noise. The pair immediately rejected from the 1.1680–1.1690 zone on the Minutes release, producing a clear 1h bearish engulfing candle in the zone — the textbook Idea 1 entry signal.

Thursday’s hot PCE print reinforced the move. Core PCE came in above consensus, validating the hawkish Fed repricing and driving EUR/USD lower through 1.1640 and toward the 1.1600 area. Verified data shows the pair at approximately 1.1630 on May 27–28, consistent with the Target 1 progression. Friday’s session was more tentative — Iran deal optimism created some USD softness and the pair stabilised — with a closing level of approximately 1.1660, having bounced from the lows on the Iran headline flow. The week began near 1.1638, bounced to approximately 1.1685, and closed near 1.1660: a range-bound outcome with the key directional move being the rejection from the Idea 1 entry zone.

Trade Performance

Idea 1 (sell the bounce at 1.1680–1.1700) triggered cleanly on Wednesday’s FOMC rejection. The 1h bearish engulfing candle at the zone confirmed the entry. Target 1 at 1.1600 was reached during Thursday’s PCE-driven session. Target 2 at 1.1550 was not reached — the pair found support ahead of that level as Iran optimism limited the downside on Thursday afternoon and Friday. A partial result, but the primary target was delivered with textbook execution: the bearish 4h structure, the resistance zone, the catalyst, and the confirmation candle all aligned precisely.

Idea 2 (the bullish breakout above 1.1740) never triggered. The pair tested 1.1680–1.1690 at its weekly high but never approached 1.1720 or 1.1740. The FOMC Minutes removed the dovish catalyst required for this scenario.

Idea 3 (the range fade) was viable through Tuesday and into Wednesday morning. The pair oscillated between 1.1630 and 1.1680 in a tight pre-event band, and traders who faded both extremes with the prescribed tight stops and honoured the 60-minute blackout around the Minutes captured small gains. The FOMC reaction was sharp and directional — the correct outcome for a position held flat through the release.

EUR/USD this week was the week’s most satisfying instrument from a framework perspective. The macro conflict we identified — tariff-driven USD noise versus structural hawkish repricing — resolved exactly as the analysis described, with the FOMC Minutes serving as the verdict. The pair did what counter-trend bounces in clean downtrends do: it bounced to resistance, offered the entry, and resumed the trend. Recognising the difference between a bounce and a reversal — and building the entry criteria around that distinction — was the value the outlook delivered.

3. XAU/USD (Gold) — The PCE Collapse Was Brutal, Then Iran Caught the Fall

Verdict: Loss on Idea 1 — the bounce to resistance triggered the short, but the stop was hit on the Iran-driven recovery; Idea 2 offered a significant long opportunity

The Outlook

Gold entered the week as the most complex setup, with the 4h ribbon in a bearish configuration, rate-hike risk providing a structural headwind, and geopolitical risk the primary bullish wildcard. The primary scenario — Idea 1 — called for selling 1h rejections at the 4,570–4,590 resistance zone, targeting 4,500 and 4,460 on a hawkish macro outcome. Idea 2 was the high-R:R structural long at 4,460–4,480 on a 4h bullish reversal, targeting 4,560, 4,640, and 4,720. Idea 3 was a range fade between 4,500 and 4,580 ahead of events. We identified the PCE on Thursday and the FOMC Minutes on Wednesday as the binary risks for Idea 1, and explicitly stated that “a hawkish outcome would accelerate the downside.”

What Happened

Gold opened the week near 4,578, having entered the Memorial Day period with Iran deal optimism that had already begun to reduce the geopolitical risk premium. The Axios report over the weekend — disclosing that the US and Iran were close to a deal including a 60-day ceasefire and Strait of Hormuz reopening — sent gold lower into Monday’s thin session, consistent with the safe-haven premium reduction thesis. By Tuesday’s open, price had slid from the 4,578 area toward 4,540–4,550, approaching the upper boundary of the Idea 1 resistance zone from below.

The FOMC Minutes on Wednesday confirmed the hawkish framework — three camps with a hawkish axis openly discussing rate hikes — and gold sold off sharply. The 4h bearish structure was accelerating. During the Asian session on Wednesday, spot gold briefly fell below 4,400, hitting a low of approximately 4,396 — its lowest level since late March. The Idea 1 short from 4,570–4,590 had been thoroughly vindicated on the directional move, but the speed of the collapse was significant.

Thursday’s PCE data was the catalyst that defined the week. Core PCE came in above consensus, printing its largest increase in nearly three years — confirming the stagflation narrative. Gold initially fell further on the hot print, testing the 4,460–4,480 zone — the precise level we had identified in Idea 2 as the “high-value medium-term long entry.” The FXEmpire analysis confirmed a low near the 4,360–4,400 area during the week, with the 200-day SMA and prior trend structure providing support. At approximately 4,455 on Thursday, a 1h bullish hammer formed — the Idea 2 trigger.

What followed was sharp: Iran deal headlines re-emerged in the afternoon session on Thursday, with Iranian sources disclosing a “preliminary informal document” on the MOU framework. Gold rebounded violently from the lows, reclaiming 4,500 during the session. By Friday, the metal steadied near 4,500 — having recovered most of the week’s losses — as reports of a 60-day ceasefire extension and Strait of Hormuz reopening framework dominated. The weekly close was approximately 4,540 per the verified data (TradingView: Gold ~$4,540 close May 29).

Trade Performance

Idea 1 (sell the bounce at 4,570–4,590) was technically correct directionally — gold fell from the resistance area toward 4,460 and briefly below — but the Iran-driven Thursday recovery would have hit the 4,640 stop-loss for traders who held into Friday. The move to the targets (4,500 and 4,460) was achieved intraweek, and Target 1 at 4,500 and Target 2 at 4,460 were both reached during the week’s low print. Traders who took partial profits at each target and reduced size before Friday’s Iran session would have captured a positive result. Traders who held full size into the Iran recovery faced a challenging exit. The lesson: in geopolitically-driven instruments, partial profit-taking at defined targets is not optional — it is the risk management.

Idea 2 (buy the structural support at 4,460–4,480) was the week’s highest-quality setup in hindsight. The zone was tested on Thursday’s PCE-driven collapse, a bullish reversal formed near 4,455–4,460, and the Iran recovery delivered a clean 100+ point move back toward 4,540–4,560. Traders who had Idea 2 prepared — even as a lower-probability alternative to the primary short thesis — were positioned for the week’s most explosive move. The entry framework (limit buy at 4,475 or market buy on 4h bullish confirmation) was tested and confirmed. This is the second consecutive week that the structural support zone has absorbed the selling and delivered a meaningful reversal — a pattern that deserves respect heading into the next week.

Idea 3 (the range fade between 4,500 and 4,580) was viable through Tuesday and into the early Wednesday session. The Iran MOU headlines had compressed the range, and fading the extremes with the prescribed $25 stops captured small gains ahead of the Minutes. Flat positioning ahead of the FOMC release was the correct discipline — the Wednesday move was too sharp and directional to survive with range-fade sizing.

Gold this week illustrated the challenge of trading a geopolitically-driven asset during active diplomatic negotiations. The FOMC hawkish shock and PCE confirmation delivered exactly the downside Idea 1 required — but the Iran deal headlines compressed the recovery into a single Thursday session, making full target capture dependent on active management. The structural demand at 4,460–4,480 has now held twice in as many weeks. That level deserves primary setup status for the week ahead.

Weekly Summary & Lessons Learned

The week of May 25–29 was defined by three simultaneous forces operating on different timescales: thin Monday liquidity that distorted early price action, a hawkish FOMC minutes revelation mid-week that repriced the rate path, and Iran deal diplomacy that provided explosive intraday reversals on Thursday and Friday. No single instrument offered a clean, uninterrupted directional week — and our advance warning of that complexity proved accurate.

DE40 delivered the week’s most patient trade. The 25,200 breakout never materialised, but the 24,800–24,850 Idea 1 zone was tested twice and held. The Iran recovery drove a constructive Friday close at 25,113, ending May up 3.4%. The structure remains bullish above the 4h ribbon, and 25,200 remains the breakout line.

EUR/USD was the week’s cleanest framework execution. The bounce to 1.1680–1.1690 delivered the Idea 1 rejection candle exactly as described. The FOMC Minutes were the verdict. Target 1 was reached. The pair closes the week near 1.1660, having confirmed the primacy of the bearish 4h structure over the tariff-driven noise.

XAU/USD produced the week’s most instructive lesson in position management. Idea 1 was directionally correct — gold reached both targets intraday — but the Iran recovery compressed the opportunity window. Idea 2, which required waiting for the structural demand zone, delivered the week’s highest-R:R move. Two consecutive weeks of demand at 4,460–4,480 holding is a significant technical signal.

The macro regime that dominated the week — stagflation confirmed by PCE, rate hike risk being actively priced by the Fed, and geopolitical Iran headlines providing sharp intraday reversals — is unlikely to resolve cleanly in the week ahead. Position sizing should remain conservative, and partial profit-taking at defined targets is non-negotiable in this environment.

Our full outlook for the week of June 1–5 will be published ahead of Monday’s open.

— 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.

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