Markets ended the week with a more balanced tone than the previous one, but not a calm one. Investors responded positively to signs of progress in US Iran talks, helping stocks rise, yet the bigger market story did not disappear. The Strait of Hormuz remains a major pressure point, energy disruption is still feeding inflation concerns, and central banks are facing a much harder path than they were just a few months ago. Reuters reported on Friday that Asian stocks were higher and risk appetite improved, even as both Washington and Tehran remained far apart on key issues.
Oil stayed at the center of everything. Brent rose on Friday to around $104.24 a barrel and WTI to about $97.46, but both were still on track for weekly losses, with Brent down 4.6% and WTI down 7.6%. That tells the story of the week well: prices pulled back from earlier spikes as peace hopes improved, but the market still does not believe supply conditions are close to normal. Reuters also reported that around 14 million barrels per day remain disrupted and that full flows through Hormuz are not expected to return before 2027, even in a more optimistic scenario.
In currencies, the dollar stayed firm. Reuters said the dollar index held near 99.23 on Friday, not far from a six week high, supported by safe haven demand as well as strong US data showing lower jobless claims and manufacturing activity at a four year high. The euro remained near a six week low, the yen hovered around 159 per dollar and stayed close to the level that keeps intervention fears alive, while sterling was set for a weekly gain of 0.8%. The broader FX message is that even when peace hopes lift equities, the dollar still has support as long as oil stays high and markets keep leaning toward tighter policy.
Gold lost some ground again. Reuters reported that spot gold was around $4,522.06 on Friday and down about 0.3% for the week, as a stronger dollar and elevated oil prices kept rate hike expectations alive. Gold had brief support earlier in the week when yields and oil eased, but by Friday the dominant force was still the same one seen across markets: inflation pressure from energy is making it harder for central banks to sound comfortable, and that reduces the appeal of a non yielding asset like gold.
That policy backdrop matters for next week. Reuters reported that markets are now pricing in the possibility of a Federal Reserve rate hike by year end, and Nomura has dropped its call for Fed cuts in 2026. In Europe, EU Economy Commissioner Valdis Dombrovskis said on Friday that the ECB will need to respond to rising inflation, with euro zone inflation projected at 3.1% this year. For forex, gold and oil traders, that means next week is unlikely to be driven by geopolitics alone. The rates story is getting louder again.
For crypto, the weekend of 23 to 24 May is likely to be more about reaction than direction. Because digital assets keep trading while most traditional markets pause, bitcoin and ether may act as the first real time sentiment gauge for any fresh headlines from the US Iran talks. The most reasonable base case is another headline driven weekend rather than a clean trend. If diplomacy sounds more constructive, crypto could stay supported alongside broader risk appetite. If talks stall again, a firm dollar and renewed rate fears could keep upside limited. That is an inference, but it follows directly from the way stocks, oil, the dollar and yields traded this week.
Looking ahead, next week’s tone for forex, oil and gold will likely come down to three questions. First, do the peace talks produce anything concrete. Second, can oil keep cooling, or does it stay trapped at elevated levels that continue feeding inflation pressure. Third, do central banks start sounding even more defensive as markets push out hopes for easier policy. Reuters quoted one analyst saying WTI is likely to remain in a $90 to $110 range next week, which suggests that even after this week’s pullback, the energy shock is still far from resolved.
For now, the week closes with cautious optimism in equities, but not a full risk on reset. Oil is still historically elevated, the dollar remains strong, gold is still struggling to regain momentum, and crypto now takes over as the weekend sentiment barometer. If weekend headlines stay constructive, broader markets may reopen on a steadier footing. If they do not, the same inflation and policy fears could return quickly.
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OQtima’s weekly market wrap for 18 to 22 May 2026, covering cautious peace hopes, elevated oil, a firm US dollar, softer gold, and the crypto outlook for 23 to 24 May as markets stay sensitive to inflation, rates and Middle East headlines.
