Market Highlight 20.05.2026

The USD reached its highest level in 6 weeks against the EUR on Tuesday as the market focused on the possibility that the Federal Reserve could shift toward monetary tightening to contain inflation driven by higher energy prices. At the same time, the peace arrangement in the Middle East remains highly fragile, adding further pressure to market sentiment. The USD rose sharply in March after Iran closed the Strait of Hormuz, pushing oil prices higher, weighing on oil-importing economies such as Japan and the euro area, and boosting demand for the USD as a safe-haven asset. At present, the USD is also being supported by higher bond yields amid concerns over inflation and uncertainty over how the new FED Chair, Kevin Warsh, will respond if price pressures continue to build. In addition, expectations of a less aggressive tightening path in Europe and the UK are also working in the USD’s favor. The market is now assigning a 50% probability to a FED rate hike in December 2026, reflecting concerns that core consumer prices may continue to rise and that inflation expectations may drift higher.

Global gold prices fell sharply by 1,84% on Tuesday to 4.482 USD/ounce, as a stronger USD combined with expectations of potential FED rate hikes and rising U.S Treasury yields. Real interest rates are increasing broadly across many economies, and this is currently the biggest source of pressure on gold prices. The market is now waiting for the Minutes of the FED’s latest policy meeting, due early Thursday morning, to assess officials’ views on the possibility of rate hikes in the second half of this year.

Domestically, interbank USD/VND continued to trade around 26.350 - 26.360 yesterday, with the effective daily ceiling set at 26.389.

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