Forex weekly outlook: Key news & Trade setups (May 19 - May 23, 2025)

Looking to stay ahead in the forex market this week? You've come to the right location. May 19 through May 23 is loaded with high-impact events on the economic calendar that have the potential to rock major currency pairs and usher in new trading opportunities.

Here in today’s article, we'll dissect each day’s top storylines, identify leading currencies to watch, and provide concise, actionable trade ideas so you can tackle the week with ease and accuracy. Let's take a closer look and be prepared to get the most out of what's ahead.

 

Monday, May 19th, 2025

CNY Industrial Production y/y

(03:00 GMT)

Forecast: 7.7% | Previous: 5.9%
Impact: AUD/CNH, USD/CNH

China's manufacturing production is set to see a sharp recovery, with estimates indicating a pickup to 7.7% YoY from 5.9% in April. This pickup is attributed to fresh stimulus initiatives focusing on manufacturing sectors such as tax holidays on green energy equipment and semiconductor production. An under 6.5% reading indicates entrenched deflationary pressures and could lead to risk-off flows in commodity-correlated currencies such as the AUD. The 1.8% shortfall from estimates – the largest since November 2023 — increases volatility risks for CNH crosses.

Technical Setup
AUD/CNH faces strong resistance at 4.6772, aligning with the 61.8% Fibonacci retracement of its 2024 decline.

Trade Idea
🎯 Sell AUD/CNH on breakdown below 4.5720 if actual <6.5%
📍 Stop-loss: 4.7086
🎯 Take-profit: 4.3400

CNY Retail Sales y/y

(03:00 GMT)

Forecast: 5.9% | Previous: 5.9%
Impact: CNH crosses, AUD/JPY

Retail stagnation at 5.9% YoY highlights soft consumption in the context of cooling property markets in China. But a beat above 6.2% might reflect effective policy easing through recent interest rates and household subsidies initiatives. Dual-report indicator dynamics introduce asymmetrical risk factors: synchronized beats indicate broad-based recovery; and divergent figures (e.g., strong industry/weak consumption) might delay CNY softness. AUD/JPY is especially sensitive due to Australia’s iron exports being subject to Chinese building activity.

Technical Setup
AUD/JPY tests critical support at its 200-SMA (91.95), where a breakdown would confirm bearish momentum. The daily RSI’s failure to breach 50 since April highlights persistent selling pressure.

Trade Idea
🎯 Buy AUD/JPY on 30M close above 92.00 if both CNY metrics beat
📍 Stop-loss: 91.0
🎯 Take-profit: 95.60

EUR Final Core CPI y/y

(10:00 GMT)

Forecast: 2.7% | Previous: 2.7%
Impact: EUR/USD, EUR/GBP

The Eurozone sticky core inflation level stands at 2.7% due to ongoing services sector pricing pressures, especially in healthcare (+4.1% YoY) and hospitality (+5.3%). Although the ECB indicated a June rate decrease, updated components reporting above 3% services inflation might lead policymakers to a more hawkish slowdown. 87% odds for a 25 bps cut are priced in markets now, so this release is essential for refining bets. EUR/GBP is under additional pressure due to BoE-ECB differing policies, as UK inflation is more resilient.

Technical Setup
EUR/GBP’s descending trendline resistance at 0.8460 aligns with the 61.8% Fib level of its Q1 decline, creating a high-probability reversal zone.

Trade Idea
🎯 Sell EUR/GBP on rejection at 0.8450 with bearish 1H candle
📍 Stop-loss: 0.8490
🎯 Take-profit: 0.8350

 

Tuesday, May 20th, 2025

AUD Cash Rate

(04:30 GMT)

Forecast: 3.85% | Previous: 4.10%
Impact: AUD/USD, AUD/JPY

The RBA is likely to cut 25 bps to 3.85%, its first since 2020, as growth is being pressured by global trade tensions and soft Chinese demand. The policy statement will be carefully watched for hints at further easing – a dovish bias indicating "data dependency" might lead to AUD selling, but highlighting high services inflation might cap losses.

Technical Setup
AUD/USD’s repeated failures at 0.6500 resistance reinforce bearish bias. A daily close below May’s low of 0.6370 would expose 2024’s 0.6170 support.

Trade Idea
🎯 Sell AUD/USD on breakdown below 0.6370 post-announcement
📍 Stop-loss: 0.6510
🎯 Take-profit: 0.6250

CAD CPI m/m

(13:30 GMT)

Forecast: 0.5% | Previous: 0.3%
Impact: USD/CAD, CAD/JPY

The resurgent inflation in Canada to 0.5% MoM is due to rebounding energy prices and sticky sectoral housing prices. An above-forecast 0.6% beat might encourage the Bank of Canada to defer its scheduled September reduction, especially if the preferred Bank’s trim/medians exceed 3%. CAD/JPY shows purer exposure to oil – CAD correlations as Brent crude tests resistance at $85.

Technical Setup
USD/CAD tests critical resistance at 1.3995 (50-SMA and 38.2% Fib). A daily close above 1.4010 would invalidate the bearish channel from December.

Trading Idea
🎯 Buy USD/CAD on break above 1.3995 if CPI ≥0.6%
📍 Stop-loss: 1.3920
🎯 Take-profit: 1.4200

 

Wednesday, May 21st, 2025

GBP CPI y/y

(07:00 GMT)

Forecast: 3.3% | Previous: 2.6%
Impact: GBP/USD, EUR/GBP

The UK inflation is set to jump to 3.3% y/y, a strong rebound that will unsettle the Bank of England’s recent dovish tone. The increase is set to be fueled by persistent services inflation and increasing utility prices despite a moderation in food inflation. Should the reported figure be higher than estimates, it is likely to revive hopes for a postponed rate reduction, and hence, sharply push up sterling. On the contrary, a miss could strengthen anticipation for an August rate reduction and bear on GBP all over. The markets will also keep an eye out for clues from core and services CPI because they remain top priority in BoE considerations.

Technical Setup
GBP/USD is consolidating just above the 1.3100 psychological level, with a bullish divergence forming on the daily RSI—a signal that bears may be losing steam. The pair faces immediate resistance at 1.3400 (recent swing high), with support at 1.3200.

Trade Idea
🎯 Buy GBP/USD on a break and close above 1.3200 if CPI beats
📍 Stop-loss: 1.3136
🎯 Take-profit: 1.3450

 

Thursday, May 22nd, 2025

EUR French Flash Manufacturing PMI

(08:15 GMT)

Forecast: 48.9 | Previous: 48.7
Impact: EUR/USD, EUR/JPY

France’s factory PMI is predicted to increase modestly but still be in contractionary territory and reflect continuing troubles in the European heartland’s industry. Ongoing weakness here might weigh on the euro if German data later in the session also underwhelms. But a surprise to the upside—especially if it crosses above 50—would attest to a much-sought reversal and might lead to a euro relief rally.

Technical Setup
EUR/JPY is holding above 162.00, with a bullish trend formation on the 4H chart.

Trading Idea
🎯 Buy EUR/JPY on a PMI beat and 4H close above 163.00
📍 Stop-loss: 162.00
🎯 Take-profit: 165.50

EUR German Flash Manufacturing PMI

(08:30 GMT)

Forecast: 48.8 | Previous: 48.4
Impact: EUR/USD, EUR/GBP

Germany's industry is forecast to improve modestly but remain below growth levels. This reading is a crucial one for the euro because Germany's industrial activity tends to set the tone for the entire bloc. Still, beating estimates could spark a short squeeze in EUR/USD; another disappointment will further reinforce bearishness.

Technical Setup
EUR/USD is eyeing a breakout from the 1.1200 pivot. A sustained move above 1.1240 would signal a bullish reversal, while a drop below 1.1100 would confirm further downside.

Trading Idea
🎯 Buy EUR/USD on a PMI beat and close above 1.1190
📍 Stop-loss: 1.1080
🎯 Take-profit: 1.1550

GBP Flash Manufacturing PMI

(09:30 GMT)

Forecast: 46.2 | Previous: 45.4
Impact: GBP/USD, GBP/JPY

UK industry is stuck in contractionary mode, although a modest recovery is expected. A surprise surge into 48 and above signals stabilization and would be GBP-positive. Ongoing weakness, however, will confirm the UK’s growth troubles and potentially pressure sterling.

Technical Setup
GBP/JPY is trading above the 200-SMA at 191.00, with a bullish bias if UK data surprises.

Trading Idea
🎯 Buy GBP/JPY on a PMI beat and 4H close above 192.00
📍 Stop-loss: 190.80
🎯 Take-profit: 194.00

USD Unemployment Claims

(13:30 GMT)

Forecast: 227K | Previous: 229K
Impact: USD/JPY, EUR/USD

US jobless claims are set to hold steady, highlighting a strong labor market. But any considerable spike over 240K would heighten recession concerns and could be a catalyst for a risk-off move and pressure USD/JPY downwards. Conversely, below 220K would solidify the Fed’s “higher for longer” view and underpin dollar support.

Technical Setup
USD/JPY is consolidating near 145.00, a key psychological and intervention zone. A break below 143.50 would open the way to 140.20.

Trading Idea
🎯 Sell USD/JPY on a claims beat above 240K and break below 143.50
📍 Stop-loss: 145.50
🎯 Take-profit: 140.00

USD Flash Manufacturing PMI

(14:45 GMT)

Forecast: 49.9 | Previous: 50.2
Impact: EUR/USD, USD/JPY

US industry is poised to sink into contraction once again. A surprise above 51 would confirm underlying strength and underpin the dollar, while a miss might firm up worries over US growth and see EUR/USD move higher.

Technical Setup
EUR/USD is testing resistance at 1.1230, with support at 1.1100.

Trading Idea
🎯 Buy EUR/USD on a PMI miss and close above 1.1230
📍 Stop-loss: 1.1133
🎯 Take-profit: 1.1550

 

Friday, May 23rd, 2025

GBP Retail Sales m/m

(07:00 GMT)

Forecast: 0.4% | Previous: 0.4%
Impact: GBP/USD, EUR/GBP

UK retail revenues are expected to remain firm, indicating cautious optimism in consumers' attitudes. Better-than-expected numbers would reinforce the story of economic resilience and support GBP. A miss, however, could see the pound quickly surrender recent gains, especially ahead of the weekend.

Technical Setup
GBP/USD is holding above 1.3000, with resistance at 1.3050.

Trading Idea
🎯 Buy GBP/USD on a retail sales beat and close above 1.3050
📍 Stop-loss: 1.2950
🎯 Take-profit: 1.3200

CAD Core Retail Sales m/m

(13:30 GMT)

Forecast: 0.2% | Previous: 0.5%
Impact: USD/CAD, CAD/JPY

A modest 0.2% increase in Canadian core retail sales would be an indication of consumer wariness, but a surprise beat could resuscitate CAD strength if headline sales also surprise to the upside. Weakness here would cement expectations for a July BoC rate cut.

Technical Setup
USD/CAD is capped at 1.4000, with support at 1.3900.

Trading Idea
🎯 Sell USD/CAD on a weak print and break below 1.3900
📍 Stop-loss: 1.3950
🎯 Take-profit: 1.3750

CAD Retail Sales m/m

(13:30 GMT)

Forecast: -0.3% | Previous: -0.4%
Impact: USD/CAD, CAD/JPY

Headline retail sales are likely to decline once more and reflect ongoing consumer headwinds. In the event that actual figures are less adverse and even positive, CAD might experience a relief rally. Yet a deeper decline would maintain pressure on the currency and support dovish BoC bets.

Technical Setup
USD/CAD is range bound between 1.3901 and 1.4000.

Trading Idea
🎯 Sell USD/CAD on a weak print and break below 1.3900
📍 Stop-loss: 1.3950
🎯 Take-profit: 1.3750

Note: All times are in GMT. Trade ideas are provided for educational purposes — always confirm market conditions before entering positions.