North American weekly update: After a somewhat calmer period in global markets, volatility is picking up again. Indeed, traders had been pricing in a relative Middle East truce with the US-China summit. But participants are now moving forward, looking at potential renewed tensions in Iran and a new hawkish pricing after the new Fed Chairman, Kevin Warsh, was confirmed.
Now that the US-China summit has wrapped up, financial markets are quickly moving on.
Participants are focusing on bigger macroeconomic issues, especially the major changes expected with new Federal Reserve leadership and the ongoing stalemate in the Middle East. The president has set a new deadline for Saturday (23rd), but progress remains slow.
The geopolitical situation remains at a standstill, with a clear diplomatic solution seemingly out of reach due to recent deal rejections.1
Markets remain uncertain, with prediction markets pricing only a 35% chance of a peace deal by the end of June2. This ongoing uncertainty keeps risk levels high in global energy supply chains, even though the threat of war is no longer making headlines.
Because of the lack of progress, Crude Oil has remained above $100 for most of the past two weeks.
WTI Crude 4H chart. May 20, 2026 – Source: TradingView. Past performance is not indicative of future results.
The main force behind this week’s market moves is the Federal Reserve. After being confirmed by the Senate last Thursday, Kevin Warsh will be sworn in as the new Fed Chair this Friday3, and traders are trying to price what's next.
Markets are already adjusting for what could be a major shift in US monetary policy. Investors expect major changes in how the Fed provides guidance, measures inflation, and manages its balance sheet. With so much uncertainty, for now, expectations are for a more hawkish and restrictive central bank.4
This potential shift has sparked a strong US dollar rally, putting pressure on the wider financial markets. As traders adjust to the idea of tighter Fed policies and less global liquidity, demand for the dollar keeps rising. This comes at the cost of riskier assets, like cryptocurrencies, falling sharply as extreme speculation eases the market.
At the same time, bonds are selling off quickly, driving yields higher as markets expect less support from the central bank. Even precious metals are losing their safe-haven appeal as yields climb.5
Looking ahead to the end of the week, everyone is watching Friday’s swearing-in of Kevin Warsh to see if his first comments as Fed Chair will confirm the market’s concerns about a more hawkish approach.
Intraday technical levels for the USD/CAD
USD/CAD 4H chart. May 20, 2026 – Source: TradingView. Past performance is not indicative of future results.
USD/CAD continues to rebound within its longer-run 1.3550 and 1.3950 range, now coming close to breaking above its middle.
The extreme of the range is about 200 pips higher. Still, keep a close eye on resistance levels towards there and the general direction of the US dollar to obtain directional clues in the North American pair.
Levels of interest for USD/CAD:
Resistance levels
- 1.38 mini-resistance +/- 15 pips
- 1.39 to 1.3925 support turned resistance (range highs)
- 1.3950 mini-resistance (range highs and recent top)
Support levels
- 1.3750 momentum pivot
- 1.3630 to 1.3660 key pivot (4H 50-period MA)
- 1.3550 main 2025 support (range lows)
- 1.35 psychological support
US dollar mid-week performance vs major currencies
USD vs other majors since last Monday, May 20, 2026 - Source: TradingView. Past performance is not indicative of future results.
The dollar is now up against all major FX currencies, after a significant shift in demand since the confirmation of Kevin Warsh as the head of the Federal Reserve.
Indeed, the more hawkish US data and pricing of Kevin Warsh’s policymaking are assisting the USD.
US and Canada Economic Calendar to next Wednesday (May 27th)
US and Canadian data towards next Wednesday (May 27). Source: MarketPulse Economic Calendar
Footnotes:
1 - https://www.axios.com/2026/05/18/iran-peace-deal-offer-nuclear-unacceptable
2 - https://polymarket.com/event/us-x-iran-permanent-peace-deal-by
4 - https://www.reuters.com/business/new-day-fed-policy-forecast-cloudy-warsh-trump-us-2026-05-18/
5 - https://ca.finance.yahoo.com/news/global-long-bond-yields-climb-044921396.html
This article and its contents are intended for educational purposes only and should not be considered trading advice. Forex trading is high-risk. Losses may exceed deposits.
