Five key currency pairs to watch in May 2026 and why

• US dollar strength stalls amid narrowing yield advantage: The US Dollar Index is range-bound as shrinking US – global yield spreads and relatively hawkish stances from other central banks cap further USD upside, setting the macro tone for FX in May.
• EUR/USD & AUD/USD maintain bullish structures: EUR/USD holds above key moving averages with a bullish crossover, while AUD/USD trades at fresh 52-week highs — both signaling sustained medium-term uptrends unless key supports break.
• USD/CAD, USD/SGD, and USD/CNH show a USD weakness bias: All three pairs exhibit bearish technical setups, trendline breaks, trading below major moving averages, and ongoing downtrends, highlighting broad USD softening against select currencies.
• Key technical levels define May trading risks: Clear pivot zones across pairs (e.g., EUR/USD 1.1620, AUD/USD 0.6945, USD/CAD 1.3735) will determine whether trends extend or reverse, making them critical for positioning.
• Macro catalysts could drive volatility: Leadership transition at the Fed, alongside evolving global monetary policy divergence and geopolitical risks, could amplify FX moves and trigger breakouts across these key pairs.

The second quarter is underway, and Fed Chair Powell will helm his last FOMC press conference on Wednesday, 29 April 2026¹ , before Kevin Warsh potentially takes over as the new Fed Chair in mid-May. Warsh’s confirmation is set to advance as US Senator Thom Tillis is dropping his blockade of Kevin Warsh's nomination to head the Federal Reserve.

Before we delve into these featured currency pairs and their respective technical charts, let me share a key, overarching macro theme that might potentially have a significant impact on the FX market.²

The US Dollar Index has traded sideways between 96.98 and 100.49 (see Fig. 1) since the Fed put a pause on its prior interest rate cut cycle in January 2028 and maintained its Fed funds rate at 3.50%-3.75%³ after it embarked on three interest rate cuts of 25 basis points each in the final three months of 2025 (September, October, and December).⁴

The rebound 3.7% seen in the US Dollar Index from February 2026 to March 2026 (see Fig. 1) has been driven by heightened geopolitical risk arising from the US-Iran war that started on 28 February 2026.⁵

The strength in the US Dollar Index has managed to stall at the 100.49 range resistance (see Fig. 1) at this time of writing, in line with the narrowing of the 2-year and 10-year yield spread premium between the US Treasury notes and an equal-weighted average of 2-year sovereign bonds of Germany, the UK, Japan, Canada, Switzerland, Australia, and China since January 2026 (see Fig. 1).

Both the 2-year and 10-year sovereign yield spreads have dropped to 1.34% and 1.32%, respectively, and traded below their 200-day moving averages at the time of writing (see Fig. 1), supported by recent hawkish monetary policy guidance from the ECB⁶, Canada⁷, and RBA⁸.

The recent 5-day decline of 1.5% seen on the EUR/USD from its 17 April 2026 high to 24 April 2026 has managed to stall at the key moving averages of the 20-day, 50-day, and 200-day moving averages (see Fig. 2).

The 20-day moving average has shaped a bullish crossover condition above its 50-day and 200-day moving averages, suggesting that the medium-term uptrend phase since the 13 March 2026 low of 1.1411 remains intact (see Fig. 2).

Watch the 1.1620 key medium-term pivotal support on the EUR/USD. Next medium-term resistances stand at 1.1835, 1.2040, and 1.2130/2260 (see Fig. 2).

On the flip side, a break and a daily close below 1.1620 exposes the next medium-term support zones at 1.1535/1510 and 1.1450/1410 (see Fig. 2).

The AUD/USD has managed to stage a breakout above its former 11 August 2023/22 February 2023 swing highs at 0.71400 and traded to a new 52-week high of 0.7222 on 17 April 2026 (see Fig. 3).

The price actions of the AUD/USD have so far managed to trade above its 20-day and 50-day moving averages. In addition, the daily MACD trend indicator has continued to trend upwards steadily above its centreline (see Fig. 3).

These observations suggest that its medium-term uptrend phase since the 9 April 2025 low of 0.5914 remains intact (see Fig. 3).

The next medium-term resistances stand at 0.7265, 0.7460, and 0.7620. However, failure to hold at 0.6945 key medium-term pivotal support and a daily close below it may expose the next medium-term supports at 0.6883/6760, and 0.6675/6650 (also the 200-day moving average) (see Fig. 3).

The 3.60% rebound seen in the USD/CAD from its 30 January 2026 low to 31 March 2026 high has reversed downwards and broken below its former four-month ascending trendline from 30 January 2026, now turns into an intermediate pull-back resistance now at 1.3660, and traded below the key moving averages of 20-day, 50-day, and 200-day (see Fig. 4).

In addition, the daily MACD trend indicator has trended downwards steadily below its centreline. These observations suggest that the USD/CAD may have transitioned into a downtrend phase (see Fig. 4).

Watch the 1.3735 key medium-term pivotal resistance, and a break below 1.3550 may expose the next medium-term supports at 1.3485 and 1.3425/3370 (see Fig. 4).

On the other hand, a clearance and a daily close above 1.3735 sees the next resistances coming in at 1.3795 and 1.3850 (see Fig. 5).

The three-month rebound of 2.7% from its 28 January 2026 low to 31 March 2026 high has managed to stall at the upper boundary of the major descending channel in place since 12 January 2025 high (see Fig. 5).

The recent price actions of the USD/SGD have broken below its 20-day and 50-day moving averages, which suggests that upside momentum may have eased off (see Fig. 5).

Key medium-term pivotal resistance stands at 1.2870/2930. A break below 1.2700 may expose the medium-term supports at 1.2580, 1.2450, and 1.2360 (see Fig. 5).

However, a clearance and a daily close above 1.2930 sees the next resistances coming in at 1.3085 and 1.3300 (see Fig. 5).

The USD/CNH (offshore yuan) broke below its former 23 March/14 April 2023 swing low of 6.8445 and traded to a three-year low of 6.8059 printed on 14 April 2026, as well as the 20-day and 50-day moving averages (see Fig. 6).

The price actions of the USD/CNH have continued to oscillate within a major descending channel in place since the 8 April 2025 high of 7.4294 (see Fig. 6).

Watch the 6.8880 key medium-term pivotal resistance. A break below 6.7740 may expose the next medium-term support at 6.7055 (see Fig. 6).

A clearance and a daily close above 6.8880 sees the next medium-term resistances at 6.9318/9713 and 7.0360 (also close to the 200-day moving average) (see Fig. 6).

Footnotes

1. https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
2. https://www.bloomberg.com/news/articles/2026-04-26/tillis-says-he-s-prepared-to-move-ahead-with-warsh-confirmation
3. https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
4. https://tradingeconomics.com/united-states/interest-rate
5. https://www.morningstar.com/markets/will-dollars-war-driven-rebound-continue
6. https://www.bloomberg.com/news/articles/2026-04-24/ecb-to-hike-in-june-before-reversing-course-in-2027-poll-shows
7. https://www.bloomberg.com/news/articles/2026-03-26/boc-says-oil-price-shock-will-push-near-term-inflation-higher
8. https://www.bloomberg.com/news/articles/2026-03-31/rba-says-not-possible-to-predict-cash-rate-path-with-confidence