Forex Today: US Consumer Confidence next on tap amid geopolitical optimism

Pablo Piovano FXStreet

The Greenback has started the week on the back foot, receding to two-week lows on the back of the generalised improvement in the risk complex, all in response to rising optimism on a potential US-Iran deal.

Here is what you need to know on Tuesday, May 26:

The USD Index (DXY) dropped to two-week troughs after breaking below the 99.00 support, always following the better tone in the risk-linked space. The Conference Board’s Consumer Confidence gauge will be the salient event on the US docket, seconded by the Chicago Fed National Activity Index, the FHFA’s House Price Index and the S&P/Case-Shiller Home Price Index.

EUR/USD improved markedly, advancing to multi-day highs and revisiting the 1.1650 zone amid the widespread selling bias hurting the US Dollar. There will be no data releases in either Germany or the Eurozone.

GBP/USD reversed two daily pullbacks in a row and surpassed the 1.3500 hurdle against the backdrop of the broad-based risk-on sentiment. The BRC Shop Price Inflation is due alongside the CBI Distributive Trades.

USD/JPY seems to have embarked on a consolidative move in the upper end of its range near the 159.00 neighbourhood, setting aside at the same time two consecutive daily declines. The final prints of the Coincident and Leading Economic indices will be on top of the agenda in the 'Land of the Rising Sun'.

AUD/USD rose sharply and flirted with multi-day peaks near 0.7180, resuming the uptrend after two straight daily pullbacks. Next on the Australian calendar will be the key inflation figures on May 27.

WTI prices retreated sharply and approached their lowest level in the last three weeks, near the $90.00 mark per barrel, as traders assessed the likelihood of a reopening of the Strait of Hormuz any time soon.

The strong retracement in the Greenback lent support to Gold, pushing the troy ounce closer to the $4,600 yardstick. The mixed tone from US Treasury yields across the curve also bolstered the yellow metal’s recovery.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD remains offered; bears target 1.3600

GBP/USD now leaves behind part of its recent recovery and revisits the low 1.3600s at the beginning of the week. Indeed, Cable trades with a mild downward bias amid decent gains in the Greenback as investors remain wary of upcoming US data releases and the Jackson Hole event.

EUR/USD remains sidelined above 1.1650

EUR/USD trades on the defensive following the closing bell on Wall Street on Monday, hovering around the 1.1660 region and adding to Friday’s small decline. The pair’s pullback comes in response to an acceptable rebound in the US Dollar in a context of generalised caution ahead of key US data releases and Chair Warsh’s speech in Jackson Hole.

Gold poised to extend its bullish run

Gold surrenders part of its initial advance, although it keeps its bullish pace well and sound above the $4,600 mark per troy ounce on Monday. The precious metal’s move higher comes despite slight gains in the US Dollar and a modest pullback in US Treasury yields across the curve.

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Ripple (XRP) surged more than 72% in less than a week, its strongest rally since July 2025, as cryptocurrency prices broadly broke out. But the move has a problem: it may have little to do with XRP itself. The token's near-term rally appears to have been driven largely by a broader liquidity shift after the US Treasury expanded long-end bond buybacks, pulling yields lower and lifting risk assets.

Convulsion in credit markets

The United States government just posted a $432.3 billion deficit for July, the largest monthly shortfall since March of 2021. That single burst of red ink pushed the yeartodate deficit to $1.8 trillion, with two months still remaining in fiscal 2026. At this pace, Washington will soon wax nostalgic for the “good old days” when annual deficits were only $2 trillion.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.