US Dollar Outlook: Bullish May Seasonality Meets Volatility Risk

The US dollar enters May with a supportive seasonal backdrop, historically delivering positive returns more often than not. However, this is not a one-way trade. May also carries the highest volatility of any month, with wide ranges and frequent reversals. That leaves traders balancing a bullish seasonal bias against a macro backdrop still shaped by geopolitical tensions and persistent inflation risks. Elevated oil prices and a hawkish Fed narrative could help underpin the dollar, although any easing in Middle East tensions may quickly trigger bouts of risk-on and weigh on USD. In short, May may favour USD ...