• The British pound has fallen quite a bit during the early part of the session here on Tuesday, but as you can see, the market continues to see a lot of noise and quite frankly, a lot of questions asked about the British pound against the US dollar.

• Probably not so much in the realm of what’s wrong with the pound, it’s that there’s a lot of fear out there and that makes the dollar strong.

Keep in mind that we are in the midst of filling the gap from the Monday open. That makes sense because we keep getting a lot of back and forth when it comes to the United States and Iran. So, with this, I believe this is a market that may try to bounce from here. We’ll just have to watch the interest rates in both countries and of course, we’ll have to watch the headlines.

Support Levels and Risk Appetite

If the GBP/USD pair does break down from here a little bit, the 200-day EMA right at the 1.34 level makes sense as support. Below there, the 1.33 level makes sense as support as well. So, in other words, even if we do fall, I think there are buyers’ underneath that are willing to get involved and take advantage of cheap British pounds.

To the upside, the 1.36 level I think is your short-term target. Whether or not we can break above there remains to be seen. A lot of this will come down to risk appetite. Remember the US dollar, of course, is considered to be a safety currency and that, of course, is what I think a lot of people are looking at it as just a simple, possible safety play.

The noise will continue to be deafening and therefore I would expect to continue to see a lot of choppiness.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

• The US dollar has rallied a bit during the trading session on Tuesday as we continue to see a lot of upward pressure, and I think short-term pullbacks, I think, continue to attract a lot of attention mainly due to the fact that the interest rate differential is going to remain very wide between the United States and Japan.

That being said, you also have to be very cautious with the idea that the 160-yen level is an area where we had seen a lot of action due to the Bank of Japan getting involved. The 160 yen level is an area that I think a lot of people will have to pay close attention to, and the 160.50-yen level is an area that I think that is a massive barrier for the Bank of Japan to defend as it was a swing high going back to 1990.

Support Levels and Central Bank Intervention

Short-term pullbacks at this point open up the possibility of support underneath at the 50-day EMA as well as the 158-yen level. Anything below there opens up the possibility of a move down to the 156-yen level, but I don’t think that is very likely to be the case.

All things being equal, this is a market that I think you start to look for shorter term trades on drops in the dollar against the yen and that opens up the possibility of a little bit of value hunting as well as short-term opportunities. Ultimately, this is the market that I think does continue to threaten the Bank of Japan and now it’ll be interesting to see what the Japanese yen does because the Bank of Japan has recently received word that inflation is dropping in Japan and that could ease some of their concerns about a shrinking yen. That being said, there is a lot going on at the moment, not only in the Middle East but just around the world in general, so expect a lot of volatility.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

Exchange Rates UK Research’s latest May 2026 survey of major investment banks shows the EUR/USD exchange rate is expected to remain relatively well-supported above 1.16 in the near term, with the broader balance of forecasts continuing to point towards a gradual move into the 1.20–1.24 region through 2027.

The latest poll also highlights a growing divide between banks expecting a structurally weaker US dollar over the coming years and a smaller group forecasting EUR/USD drifting back towards the low-1.10s.

Latest Survey Suggests EUR/USD Recovery Trend Remains Intact

The majority of forecasts in the latest Exchange Rates UK Research poll continue to favour gradual EUR/USD appreciation over the medium term.

Banks including Scotiabank, RBC Capital Markets, ING, SEB and Natixis all expect the pair to trade above 1.20 during 2027, while Nordea remains the most bullish institution in the survey with projections extending towards 1.28 longer term.

By contrast, Citi and Danske Bank remain more cautious on the euro outlook, forecasting EUR/USD drifting back towards the 1.12–1.14 region over time.

Overall, however, the balance of forecasts continues to point towards a broadly softer US dollar environment compared with the past several years.

That outlook reflects the pair’s broader recovery trend since mid-2025.

EUR/USD rallied strongly from lows near 1.13 during 2025 and spent much of early 2026 trading in the 1.16–1.18 region. Although momentum has slowed during May, the pair remains significantly above the lows below parity seen during the 2022 energy crisis and the broader dollar surge that dominated 2022–2024.

Recent price action also suggests markets are becoming more comfortable with EUR/USD stabilising above the 1.15 level after repeated pullbacks found support.

Dollar Weakness Narrative Continues to Dominate Forecasts

A key theme running through the latest bank forecasts is the growing importance of the long-term US dollar outlook.

Many institutions now expect the Federal Reserve to gradually move towards lower interest rates during 2026 and 2027 as US growth slows and inflation pressures moderate further.

At the same time, concerns surrounding US fiscal deficits and rising government debt continue to feature prominently in longer-term dollar outlook discussions.

By comparison, the euro has benefited from improving Eurozone growth expectations, easing energy market pressures and reduced concerns about fragmentation risks within the currency bloc.

The European Central Bank has also maintained a relatively cautious approach towards rate cuts, helping support yield differentials versus the US dollar.

However, banks remain cautious about forecasting a rapid EUR/USD rally.

Global growth concerns, geopolitical tensions and periodic safe-haven demand for the US dollar continue to generate volatility and limit the pace of euro gains.

EUR/USD Outlook: Banks Increasingly Comfortable Forecasting Higher Euro-Dollar

The latest Exchange Rates UK Research survey suggests a growing number of banks now view EUR/USD strength as a medium-term structural trend rather than simply a short-term correction.

Importantly, most forecasts now cluster above the average trading ranges seen between 2022 and 2024, reinforcing the idea that the market may be entering a new phase of broader US dollar weakness.

For now, the survey points to gradual appreciation rather than an aggressive breakout higher.

But with markets increasingly focused on Federal Reserve easing expectations and longer-term fiscal risks in the United States, institutional sentiment towards EUR/USD remains notably more constructive than it was even a year ago.

Copper prices remained stable in recent trading, settled near $6.3500 level affected by its confinement between $6.4000 barrier, while $6.1000 level form extra support against the attempt of activating the bearish corrective trend.

Note that providing negative momentum signals by stochastic may push the price toward forming some bearish waves and attempting to attack the current support level. A break below this support would confirm readiness for further corrective waves, to target $5.9500 and $5.8000, while breaching the barrier and holding above it will turn it to the bullish path, to expect recording extra gains by its rally towards $6.6000.

The expected trading range for today is between $6.1000 and $6.4000

Trend forecast: Fluctuated within the bullish trend