**Weekly Forex Forecast: 17th to 22nd August 2025**
*Adapted and expanded from the original analysis by Kathleen Brooks on DailyForex.com.*
**Introduction**
The foreign exchange market is poised for another dynamic week as traders examine the outcomes of recent economic releases and position themselves ahead of upcoming central bank decisions. The week spanning 17th to 22nd August 2025 is packed with key data points and policy cues from the world’s major economies. Currency traders should stay vigilant for new technical signals while keeping macroeconomic developments in perspective. This forecast will analyze the outlook for the US Dollar, Euro, British Pound, Japanese Yen, and other major currencies, providing actionable insights and technical setups for the coming trading week.
**Economic Developments & Themes: What’s Shaping the Markets?**
Several recurring themes dominate the currency landscape. These include diverging central bank policies, persistent inflation, and geopolitical uncertainties. Key highlights to watch during the week include:
– Release of US Fed meeting minutes for clues on future policy direction.
– UK inflation and employment reports impacting the Pound’s short-term trajectory.
– Eurozone PMI data, critical for the EUR outlook.
– Yen’s sensitivity to Japanese economic releases and global risk sentiment.
– Chinese data as a wildcard, affecting risk assets and commodity-linked currencies.
**US Dollar (USD) Outlook**
The US Dollar Index (DXY) has shown resilience amid global uncertainties, benefiting from its safe-haven status. As markets await more clarity on the Federal Reserve’s rate path, traders should note the following:
– US Retail Sales and Fed Minutes are top-tier catalysts.
– Mixed inflation signals for July keep the rate debate alive.
– Geopolitical tensions in Eastern Europe and Asia add bid-tone to the Dollar.
**Technical Analysis for DXY:**
– The DXY has been oscillating between the 104.20 support and 106.80 resistance.
– Upside breakout above 106.80 could open a move toward the 107.50/108.00 zone.
– Breakdown below 104.20 brings 102.60 into focus.
– Technical indicators such as the 100-day moving average and RSI on the daily chart suggest neutral-to-slightly bullish momentum.
**Strategy:** Traders should await confirmation of a breakout in either direction, using stop-losses appropriately to manage risk.
**Euro (EUR) Forecast**
The Euro remains under pressure as economic activity softens across the Eurozone and markets price in a dovish tilt from the European Central Bank.
– Preliminary PMI data and final CPI figures are the focal points for EUR pairs.
– Political jitters in some member states may add to volatility.
– Key technical levels are as follows:
**EUR/USD Technical Analysis:**
– The pair is consolidating between 1.0650 and 1.0880.
– Downward pressure persists if 1.0650 gives way, with next support at 1.0550.
– Recovery above 1.0880 could see a test of 1.0950 and 1.1000 resistance levels.
– The daily chart shows a bearish alignment of moving averages, with MACD yet to signal a reversal.
**Strategy:** Sellers may look for rallies to fade below 1.0880, while buyers will want confirmed support above 1.0700 before considering long entries.
**British Pound (GBP) Overview**
The Pound faces a pivotal week, with inflation and labor market data due. These releases will shape expectations for further Bank of England tightening.
– UK CPI expected to remain elevated, but employment data may reveal labor slack.
– Mixed signals from the BoE have left Sterling in a consolidation phase.
**GBP/USD Technical Analysis:**
– Cable remains trapped in a triangle pattern, with key support at 1.2620 and resistance at 1.2840.
– Break and confirmed close above 1.2840 targets resistance at 1.2920 and 1
Read more on GBP/USD trading.