Forex Signals Brief May 12: Markets Focus on US Inflation and Trade Deals This Week

After positive news from US-China negotiations, markets are focused on trade deals this week, as well as US CPI inflation.

Skerdian Meta•Monday, May 12, 2025•4 min read

Quick overview

Gold prices have retreated from record highs due to renewed trade optimism, settling around $3,300 per ounce.
The USD/JPY pair has rebounded, supported by dollar strength, recovering from the critical 140.00 level.
Bitcoin has surged above $100,000, driven by positive sentiment from trade developments, while Ethereum has rebounded following a significant network upgrade.
Central banks are adjusting policies, with the Federal Reserve maintaining rates amid economic uncertainties and the Bank of England implementing a surprise rate cut.

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After positive news from US-China negotiations, markets are focused on trade deals this week, as well as US CPI inflation.

Trade Talks Signal Thaw in US-China Relations

Global markets experienced notable shifts this week, driven by developments in US-China trade negotiations, central bank policy decisions, and corporate earnings reports. The United States and China announced “substantial progress” in trade discussions held in Geneva, marking a potential de-escalation in ongoing trade tensions. While specific details remain undisclosed, officials from both nations expressed optimism about the outcomes and indicated that further information would be provided soon .

Central Banks Adjust Policies Amid Economic Uncertainties

In monetary policy, the Federal Reserve maintained interest rates at 4.25%–4.50%, citing increased uncertainties in the economic outlook and heightened risks of both higher unemployment and inflation . The decision reflects a cautious approach as the central bank monitors the evolving economic landscape.

Conversely, the Bank of England implemented a surprise rate cut, reducing its main interest rate to 4.25% from 4.5%. The move, decided by a narrow 5–4 vote among policymakers, aims to counteract the anticipated negative impact of tariffs on growth and inflation.

Corporate Earnings Highlight Tech Sector Dynamics

In the corporate sector, Palantir Technologies reported a 39% year-over-year increase in first-quarter revenue, reaching $883.9 million. Despite surpassing analyst expectations, the company’s stock experienced a decline due to concerns over its forward guidance and potential challenges in sustaining growth .

Advanced Micro Devices (AMD) posted strong first-quarter results, with revenue totaling $7.4 billion and a net income of $709 million. The company’s performance was bolstered by robust demand in its data center and client segments, although it continues to navigate challenges related to export restrictions and fluctuations in gaming revenue .

Weekly Market Outlook: May 12–16, 2025

Today is light in terms of economic data, but it will pick up later in the week. This week features several significant economic indicators and events that could influence global markets.

Monday, May 12

Federal Reserve Governor Adriana Kugler Speaks

Governor Kugler is scheduled to speak at the Reykjavík Economic Conference 2025, hosted by the Central Bank of Iceland. Her remarks may provide insights into the Federal Reserve’s assessment of maximum employment and monetary policy direction.

Tuesday, May 13

UK Unemployment Rate (March)
The Office for National Statistics will release the UK’s unemployment data. The previous rate stood at 4.4%. Analysts anticipate a slight uptick to 4.5%, reflecting ongoing labor market adjustments.
US Consumer Price Index (CPI) MoM (April)
The Bureau of Labor Statistics is set to publish the monthly CPI data. In March, the CPI decreased by 0.1%. For April, a 0.3% increase is expected, indicating potential inflationary pressures.

Wednesday, May 14

Australia Wage Price Index Q1
The Australian Bureau of Statistics will release the Wage Price Index for the first quarter. The previous quarter saw a 0.7% rise. This data will shed light on wage growth trends amid economic shifts.

Thursday, May 15

Australia Unemployment Rate (April)
Australia’s unemployment rate remained at 4.0% in March. The April figures will indicate whether the labor market continues its stability or shows signs of change.
UK GDP MoM (March)
The UK’s GDP grew by 0.5% in February. March’s data will reveal if this growth trajectory persists, offering insights into the country’s economic health.
US Retail Sales MoM (April)
Retail sales in the US increased by 1.5% in March. April’s figures will help assess consumer spending patterns and economic momentum.

Friday, May 16

Japan Q1 Preliminary GDP QoQ
Japan’s economy is projected to have contracted by 0.1% in the first quarter, marking the first decline since the previous year. This contraction is attributed to soft domestic demand and increased imports.
US University of Michigan Preliminary Consumer Sentiment (May)
The preliminary consumer sentiment index for May is expected to be released. In April, the index stood at 52.2, reflecting consumer attitudes towards the economy.

Last week, markets were slower than what we’ve seen in recent months, with gold retreating as a result, the EUR/USD falling below 1.12, and stock markets continuing upward. The moves weren’t too big, but we opened 37 trading signals in total, finishing the week with 25 winning signals and 12 losing ones.

Gold Retreats from Record High Amid Trade Optimism

After reaching an unprecedented $3,500 per ounce in April, gold prices have experienced a notable correction. In the past two days, spot gold has declined by nearly $140, settling around $3,300 per ounce—a 1.9% decrease. This pullback coincides with renewed market optimism following the announcement of a new US-UK trade agreement, which has shifted investor sentiment towards riskier assets. Analysts suggest that this dip is more reflective of improved trade prospects than a fundamental change in gold’s value. The 20-day simple moving average (SMA) continues to provide strong support during gold’s ascent. Should the price stabilize and form bullish reversal patterns, it may present an opportunity for investors to re-enter long positions.

XAU/USD – Daily Chart

USD/JPY Rebounds Amid Dollar Strength

The USD/JPY currency pair has shown resilience, recovering from the critical 140.00 level, supported by its 100-month moving average. A recent 2.5-cent surge propelled the pair to 146. Despite this recovery, the Japanese yen remains susceptible to global risk sentiment and the momentum of the US dollar. Chart USDJPY, W1, 2025.05.11 23:18 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

USD/JPY – Weekly Chart

Cryptocurrency Update

Bitcoin Breaks Above $100,000 on Trade Deal Optimism

Bitcoin has regained its upward momentum, surging over 6% to surpass $103,850, marking its first time above $100,000 since February. This rally is attributed to positive sentiment surrounding the new US-UK trade deal and potential progress in upcoming trade talks with China. Bitcoin’s resilience, while other assets struggle, underscores its continued strength in the market.

BTC/USD – Weekly chart

Ethereum Faces MAs after Rebound Following Pectra Upgrade

Ethereum, which had been in a prolonged downtrend for much of the year—falling from a high of $3,634 in January to a low of $1,475 in early April—has experienced a significant rally. This resurgence follows the successful implementation of the Pectra upgrade, which introduced key enhancements to wallet functionality and staking mechanisms. Ethereum’s price has risen nearly 20% to surpass $2,000, continuing its upward trajectory beyond $2,200 and reversing months of downward pressure.

ETH/USD – Weekly Chart

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.