Tag: Fed

Geopolitical Watch SLUG

DXY | 25/05/2026 Dollar Drifts Lower on Hormuz Deal Optimism - But the Technical Structure Tells a More Complex Story

The dollar is not in a simple downtrend. It is in a corrective structure — and Iran deal optimism is the force testing its floor. DXY at 98.71 today. Down 0.34%. Headlines say "dollar drifts lower on Hormuz deal optimism." That is true but incomplete. Here is the full picture: Iran deal progress pulls Brent lower ($111 to $103 in 7 days) Lower oil compresses inflation expectations Compressed inflation reduces Fed hike odds (currently ~55% before Q4) Lower hike odds weaken the dollar mechanically But rate differential (Fed hold vs ECB cutting at 2.50%) remains a structural floor The chart tells you exactly where this ends up. D1 DXY shows a clear ABC corrective wave structure after the war spike from 97.6 to 102.5. Wave (c) Fibonacci 0.618 target: 96.65. That is the measured destination if Iran deal materializes and Logan on Wednesday does not push back. The "Higher Low" at 97.69 is the invalidation floor. Red resistance at 100.03-100.40 has been rejected twice. EURUSD at 1.1646 — with 57.6% weight in the DXY basket — is the ceiling that makes any sustained DXY recovery structurally difficult. The tell is EURUSD 1.17. If EUR breaks that level, de-dollarization is accelerating and 96.65 is in play. If EURUSD rejects at 1.17 after Logan Wednesday, expect a corrective bounce back toward 100. Two events decide DXY's direction this week. Iran deal signing (no schedule, 30% probability in 24-48h). Logan speech Wednesday — hawkish confirmation of Waller's stance would suspend the entire bear thesis near-term regardless of Iran. Conviction: Medium-Bear. Conditional on Logan neutral and deal progress. 98.71 is the price of a market waiting for Wednesday.

May 25, 2026

Macro Regime SLUG

EURUSD | May 19, 2026 The Euro at 1.1621 - Holding Above 1.14 While the World Reprices the Dollar

**EURUSD | May 19, 2026** EURUSD is trading at 1.1621 tonight. By every classical measure, it should not be here. The ECB is in a cutting cycle with the deposit rate at 2.50%. Eurozone CPI is at 2.2%. The DE-US 10Y yield spread is -163 basis points - one of the widest structural disadvantages for EUR in over a decade. Every rate differential model says EURUSD should be closer to 1.08-1.10. The fact that it is trading 600 pips above that range is the most important macro signal in FX right now. Something structural has changed. Global central banks and sovereign wealth funds - particularly from the Middle East, Asia, and emerging markets - have been systematically reducing USD exposure since the SWIFT exclusion of Russia in 2022. The Iran war shock of February 2026 accelerated that process. EUR is the deepest and most liquid alternative to USD in global reserve portfolios, and it is absorbing a structural bid that has nothing to do with ECB versus Fed policy. This is the regime that explains the anomaly. De-dollarization flows are non-price-sensitive and do not stop for weekly data releases. They provide a persistent floor under EUR demand that the standard interest rate model cannot see. Two additional forces are reinforcing this bid: Warsh uncertainty - the new Fed Chair has zero established reaction function, keeping institutional dollar positioning tentative - and Brent crude above $110, which signals the Hormuz premium is still active and the geopolitical urgency driving reserve reallocation has not eased. The near-term structure is consolidation between 1.14 and 1.19. No collapse without a hawkish Warsh shock or genuine Hormuz resolution. No breakout above 1.19 without US data deterioration or further geopolitical escalation. Watch Brent and EURGBP daily - they tell you whether the regime is intact before EURUSD price does.

May 19, 2026

Weekly Outlook SLUG

The Dollar at 98.78 - Warsh Era Begins, Dollar Searches for Direction

**DXY | Weekly Outlook - May 19, 2026** DXY is at 98.78. By every classical input it should be higher. That gap between where the dollar is and where the macro narrative says it should be is the most important question in FX this week. The United States has a new Fed Chair with a hawkish reputation. April CPI printed at 3.8%. CME FedWatch is pricing 40% probability of a rate hike by April 2027. In any previous tightening cycle, this configuration produces a stronger dollar. Yet DXY has been unable to reclaim 100 for nearly three months - since the Iran war began in late February and restructured the way institutional allocators think about reserve assets. What is holding DXY below 100 is not weakness in the US economy. It is the mechanical weight of EURUSD at 1.1651 - which alone accounts for 57.6% of the index - combined with a de-dollarization structural bid from EM central banks and sovereign wealth funds that does not respond to weekly rate moves. Global yields are also rising in parallel across DE10Y, JP10Y, and UK10Y, which limits the relative yield advantage that would normally drive institutional dollar buying. The regime is Stagflationary Dollar Ambiguity. Two forces are fighting simultaneously and neither has won: the inflation case for dollar strength and the geopolitical case for reserve asset diversification away from USD. This week, the resolution comes from one event: FOMC Member Waller speaks Tuesday May 19. Three scenarios - hawkish confirmation sends DXY toward 99.62 then 100.48, ambiguity keeps the range, dovish surprise breaks 97.695 support. Conviction is Medium-Low. This is not a week for directional dollar positioning ahead of Tuesday.

May 18, 2026