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The Week in FX and Crypto: May 12, 2026
30 Years of Market Structure, Distilled Weekly.
mark schaefer
May 12, 2026
In This Issue
FX Recap — geopolitical whipsaw, strong jobs, RBA surprises
BTC — the Fibonacci roadmap
EUR/USD — vol compression, watching for the breakout
USD/JPY — stabilizing near the lows, still heavy
AUD/USD — RBA hike, testing upper band
Crude — range trade, headline risk, the ceasefire question
FX Recap
It was a week of whipsaw price action driven almost entirely by headlines out of the Middle East. Markets oscillated between risk-off escalation fear and risk-on deal optimism depending on which news wire hit first — a pattern that has defined FX trading for weeks now.
The dollar found support from two directions. Geopolitical tension kept safe-haven demand intact, while Friday's April jobs report came in stronger than expected — 115k jobs added, with March revised up to 185k. Two consecutive months of solid job growth for the first time since last spring. That data, combined with energy prices staying elevated, keeps the Fed firmly on hold and removes any near-term pressure to cut rates.
The RBA delivered its third consecutive rate hike — a surprise to many — keeping AUD in focus. And the ECB's Kocher warned this week that stagflation risk cannot be ruled out, suggesting the ECB may need to hike if energy prices don't improve. That's a meaningful shift in tone from Frankfurt.
The Iran situation remains fluid. A peace proposal has been sent through Pakistan, with negotiations now focused on ending the war entirely. Markets are watching closely but trading cautiously — the Strait remains the primary driver until there's a durable resolution.
Looking ahead, U.S. CPI on Tuesday is the week's key event. With energy prices elevated and labor markets firm, any upside surprise would reinforce the higher-for-longer narrative and give the dollar further support.
BTC — The Fibonacci Roadmap
Since breaking below 100k, every major turning point has respected the Fibonacci levels with precision.
98k (38.2% Fib) — Stopped on a dime after the first test of 80k. Dropped 38k from there.
58k (61.8% Fib) — Major support flagged ahead of the 60k low. Reversal bar on the 4-hour, momentum turning from oversold. Bounced 14k from there.
74k (38.2% Fib) — First test: dropped 8k. Second test: dropped 9k.
Now price is approaching the next confluence zone:
83,223 — 61.8% Fib of the move from ATH to 60k
85,328 — 38.2% Fib of the move from 98k to 60k
Watching lower timeframes for signs of a reversal on tests of this zone.
All mapped ahead of time.
EUR/USD
EUR/USD spent the past week consolidating in a just over 1% range between 1.1677 and 1.1797. Momentum is pointing higher but sitting in neutral territory to start the week — no clear bias at this point. The move could go either way when it comes.
What makes this interesting is the volatility. Bollinger Band width hasn't been this compressed since early January. When vol expanded later that month, EUR rallied from a low of 1.1573 to the YTD high of 1.2081 — a move of 4.3% in a short period.
Compression doesn't give us direction, but it does tell us a significant move is building. Watch for a close outside the bands for confirmation.
Upper band: 1.1817 | Lower band: 1.1661
USD/JPY
USD/JPY had a sharp move lower last Wednesday, trading down to 155.04 before bouncing — but still closing below the lower Bollinger Band. Price has since stabilized and is trading within a recent range, though still heavy near the lows. Momentum is approaching oversold and beginning to turn higher.
A move above the double top at 157.94 opens the door to test the 20-day moving average at 158.39, and potentially sets up another test of the BOJ resolve as price works back toward 160.
On the downside, the lower Bollinger Band sits at 155.93, with last Wednesday's low at 155.04 as the key level to watch.
AUD/USD
AUD/USD has been strong. Volatility has pulled back and price has touched the upper Bollinger Band in each of the last four trading sessions. There hasn't been a close below the 20-day moving average since April 7th — a sign of sustained underlying strength following the RBA's third consecutive rate hike.
Watch for a potential squeeze on a close outside the upper Bollinger Band at .7249. Beyond that, .7278 was last week's high and the YTD high — the key level on any continuation.
On the downside, .7179 (20-day moving average) is the first support, followed by .7106 (lower Bollinger Band).
Crude (June)
Crude has been trading within the broader 80–101 range that has held for the past two and a half months. Price action continues to be driven by geopolitical developments around Iran and the Strait of Hormuz — headlines remain the primary catalyst in both directions.
While there are opportunities to trade the range, headline risk cuts both ways. The bigger question hanging over the market is what happens when a permanent ceasefire is reached — where is the spike low, and where does crude settle once supply starts to normalize? It will take time for flows to return to pre-war levels, so any initial selloff on a deal is unlikely to be the final word.
Week Ahead
U.S. CPI on Tuesday is the key event. With energy prices elevated and labor markets firm, any upside surprise would reinforce the higher-for-longer narrative and support the dollar. Iran/Strait headlines remain the macro anchor — any meaningful shift toward escalation or resolution will continue to drive price action across FX and commodities.
Watch EUR/USD vol compression, 157.94 in USD/JPY, .7249 in AUD/USD, and the 83,223–85,328 zone in BTC as the key levels this week.
Market Notes
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Next Tuesday: Weekly market update. — Mark
Meridian Compass is brought to you by Mark Schaefer, a portfolio manager with over 30 years experience developing and trading systematic strategies in global futures and FX at major banks and hedge funds.
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