**Pairs in Focus: 3rd to 8th August 2025**
*Original analysis by Mahmoud Abdallah, DailyForex.com*
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The first full week of August 2025 in global foreign exchange markets comes imbued with both complexity and opportunity as major currency pairs begin responding to a mixture of central bank policy shifts, inflation readings, economic growth divergences, and heightened geopolitical tension. Traders and investors face a landscape still heavily scarred by volatility in risk sentiment and evolving economic narratives, while the outcomes and forward guidance from the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan remain key navigation points.
**Overview: Weekly Market Narrative**
– Recent price action has left several pairs at or near inflection points, following months of sharp moves, countertrend retracements, and false breakouts.
– The rising expectations of a divergence in monetary policy cycles and differing economic trajectories between the US, Europe, Asia, and emerging markets remains the primary catalyst for most major forex pairs.
– US Treasury yields and their interaction with the broader risk-on/risk-off sentiment are shaping the dollar’s global positioning.
– Commodity-sensitive currencies are interacting with swings in base and precious metals, energy prices, and risk appetite.
– Geopolitical developments, particularly in the Middle East and Asia-Pacific, as well as trade policy rhetoric, are contributing to surges in safe-haven flows and positioning.
Let us analyze the performance and prospects for the week ahead for the most-watched major forex pairs.
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**EUR/USD: Evaluating the Bearish Continuation**
**Weekly Snapshot:**
– The pair closed the prior week near 1.0870, after failing on repeated attempts to break above the 1.0950 supply, pressured by policy divergence rhetoric and relative US economic strength.
– US jobless claims and ISM data bolstered the greenback, while mixed Eurozone CPI and tepid growth metrics offered little support to the euro.
**Technical Analysis:**
– Bears continue to defend the declining trendline from the 2024 highs, while the SMA-50 on the daily chart caps momentum upside.
– Key supports at 1.0820 and 1.0775. Resistance at 1.0920, 1.0950, and a broader barrier at 1.1040.
– A close beneath 1.0820 would likely expose the cycle lows, accelerating the downtrend amid weak European data or hawkish Fed commentary.
– Momentum indicators remain skewed bearish, with RSI hovering below neutral and MACD in negative territory.
**Key Drivers Ahead:**
– US non-farm payrolls and ISM Services for July, signaling the robustness of the US labor market and consumer base.
– German factory orders and retail sales, with any surprise contraction liable to increase speculation on ECB dovishness.
– Ongoing inflation divergence and sovereign yield spreads.
**Trade Strategy:**
– Short positioning favored below 1.0920 on rallies, with stop losses above 1.0960, targeting support at 1.0800 and potentially 1.0720.
– Bullish reversals only confirmed with a strong daily close above 1.1040, in which case 1.1180 becomes the next target.
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**GBP/USD: Sterling Faces Growth Reality**
**Weekly Snapshot:**
– Sterling ended last week marginally lower at 1.2760, shrugging off stronger UK wage data as BoE policymakers cautioned against premature rate cut expectations.
**Technical Analysis:**
– Price action continues to respect the lower boundary of a well-defined month-long range between 1.2700 and 1.2900.
– A daily close below 1.2700 would risk a quick spill towards 1.2620 (June pivot).
– Overhead resistance stays firm at 1.2840 and 1.2890.
– RSI is mid-range, hinting at modest exhaustion but
Read more on GBP/USD trading.