Weekly Forex Forecast: July 20–26, 2025
Adapted and expanded from the original article by DailyForex.com
The global currency market is bracing for another eventful week from July 20–26, 2025. Amid ongoing inflation concerns, diverging monetary policies, and geopolitical tensions, currency pairs are poised to react to a flurry of developments. Leveraging technical and fundamental analysis, this outlook sheds light on potential movements across major forex pairs.
Here is a detailed breakdown of the anticipated trends for the upcoming trading week, focusing on some of the more actively traded currency pairs as originally analyzed by DailyForex.com.
EUR/USD Outlook
The EUR/USD pair showed signs of steadiness in the previous week, hovering around key technical averages. Investors continue to weigh inflation and interest rate expectations on both sides of the Atlantic.
Key Drivers:
– The European Central Bank (ECB) remains cautiously dovish, with slowing inflation data providing little impetus toward further tightening.
– In contrast, recent Federal Reserve commentary suggests U.S. interest rates will remain elevated for longer if inflation remains sticky.
– Macroeconomic data from both regions has been mixed, reinforcing a range-bound bias.
Technical Outlook:
– Support is established near the 1.0800 level, a psychologically significant price floor.
– Resistance looms at 1.0980, the 50-day moving average and a prior price ceiling.
– Momentum oscillators such as the RSI and MACD hint at neutral to slightly bullish tendencies, suggesting the market is waiting for a catalyst.
Trading Strategy:
– Short-term traders may look to buy near support around 1.0800 and take profits around 1.0980.
– A clear breakout above 1.0980 could open room toward the 1.1050 region.
– On the downside, a break below 1.0800 may bring the 1.0700 zone into focus.
GBP/USD Outlook
The British pound has been showing resilience against the U.S. dollar due to better-than-expected economic data and more persistent inflationary pressures in the UK.
Key Drivers:
– UK CPI remains above target, prompting continued speculation that the Bank of England (BoE) might keep policy tight for longer.
– Wage growth and labor market performance are closely watched as they may influence future BoE decisions.
Technical Factors:
– The cable (GBP/USD) is approaching an upward trendline that has provided support since May 2025.
– Important resistance lies near 1.3000, a round number and recent peak.
– Indicators suggest bullish momentum, though buyers may show caution near highs.
Trade Ideas:
– Long positions could be considered upon a successful test and rebound from the 1.2840 support.
– Profit targets may be set around the 1.3000–1.3050 area.
– A downside break below the trendline could cool the rally, targeting the 1.2700 region.
USD/JPY Outlook
The U.S. dollar continues to march higher against the Japanese yen, bolstered by yield differentials that favor the greenback.
Key Macroeconomic Themes:
– The Bank of Japan (BoJ) remains stuck in an ultra-loose policy regime despite some early signals of a future shift.
– Inflation in Japan has improved slightly, but not enough to warrant major database-driven action.
– The U.S. economy remains robust, keeping Treasury yields and dollar demand high.
Technical Setup:
– The 145.00 level acted as a strong support in recent sessions.
– The price is approaching the 148.50 resistance; a break there could lead to a test of 150.00.
– Oscillators remain in overbought territory but no signs of divergence are visible yet.
Trade Scenarios:
– Momentum traders may target a continuation above 148.50, with sights on the 150.00 psychological level.
– Conservative traders may wait for a pullback toward 146.
Explore this further here: USD/JPY trading.