G10 FX model update USD seems rich – but the signal is weak

Research evidence excerpt

G10 FX model update USD seems rich – but the signal is weak

19 May 2026

G10 FX model update CurrenciesDeveloped Markets

USD seems rich – but the signal is weak

◆ After the month-to-date rebound, the USD is screening slightly Joey Chew

“rich” again… HeadThe Hongkongof Asia FXandResearchShanghai Banking Corporation

Limited, Singapore Branch

◆ …but the signal is weaker compared to early April, considering joey.s.chew@hsbc.com.sg

+65 6658 5186

also that yields have surged globally Paul Mackel

Global Head of FX Research

◆ Other model implications: crosses like AUD-NZD and NOK-SEK The Hongkong and Shanghai Banking Corporation Limited

seem interesting; JPY gains from intervention likely short-lived paulmackel@hsbc.com

+852 2288 5523

Mark McDonald

This is the tenth update for our G10 FX models. In our previous update (How to de- Head of AI and Data Science

escalate?, 7 April 2026), our models indicated that the USD was looking “overbought” HSBC Bank plc

mark.mcdonald@hsbcib.com

against risk-sensitive G10 currencies in early April. Catalysed by the Middle East +44 20 7991 3119

ceasefire announcement on 8 April, that “richness” of the USD was subsequently Shiva Joon, CFA

unwound. There was a broad-based decline of the USD in the rest of April. Data Scientist

HSBC Bank plc

shiva.joon@hsbcib.com

But there has been a stalemate since then – the ceasefire is holding but there is still +44 20 7991 1356

no credible plan to re-open the Strait of Hormuz. Globally, inflationary pressures are

Akshat Singla

building, while growth – and thereby fiscal – concerns are rising, which have led to Associate

Bangalore

higher bond yields. Notably, our multi-asset strategists think that US 10y yields are

now in the “danger zone” that tends to put pressure on virtually all asset classes (see