Weekly Forex Forecast: August 24–29, 2025
By DailyForex.com (Original Author: Christopher Lewis)
Expanded and restructured by [Your Name]
The global foreign exchange markets are navigating a complex landscape of economic developments, geopolitical tensions, and evolving monetary policies. As we look ahead to the trading week from August 24 to 29, 2025, traders should prepare for volatility driven by central bank signals, key macroeconomic data, and cross-market trends in commodities and indices.
This forecast builds upon the analysis authored by Christopher Lewis on DailyForex.com, providing additional context and an expanded outlook for the major currency pairs and related factors shaping the week’s trading opportunities.
Highlights of the Week:
– Focus remains on central bank policy divergence, especially between the U.S. Federal Reserve, European Central Bank (ECB), Bank of Japan (BoJ), and Bank of England (BoE).
– Commodities such as gold and crude oil continue to influence commodity-linked currencies, including the Australian dollar and Canadian dollar.
– Upcoming economic data, notably from the United States and eurozone, could shift sentiment across the majors.
– Technical setups suggest critical support and resistance zones are being tested as markets consolidate during the late-summer period.
Let’s take a closer look at the individual currency pairs and the broader landscape influencing their direction.
EUR/USD: Drifting as Traders Wait for ECB and Fed Clarity
The euro continues to hover in a consolidation zone against the U.S. dollar. Traders remain cautious as economic momentum in the eurozone stagnates and inflation decelerates, while the U.S. continues to post stronger-than-expected economic performance. The EUR/USD pair remains caught between competing narratives as both the ECB and Federal Reserve signal they will keep interest rates on hold for now.
Key Factors Influencing EUR/USD:
– The eurozone’s latest PMI figures continue to show contraction in the manufacturing sector.
– ECB President Christine Lagarde has suggested monetary policy will remain restrictive until inflation meets the 2% target.
– In the U.S., retail sales and employment data remain robust, increasing expectations of prolonged high interest rates.
Technical Outlook:
– Resistance remains near the 1.1000 handle.
– Strong support continues to hold around 1.0800.
– A breakout above 1.1000 could initiate bullish traction, whereas a drop below 1.0800 would likely pull the pair toward 1.0650.
Trading Strategy:
– Traders may adopt a range-trading approach between 1.08 and 1.10 until a directional catalyst emerges.
– Watch the release of the German IFO Business Climate Index and U.S. PCE inflation data for clearer guidance.
GBP/USD: Struggling Under Economic Uncertainty
The British pound has failed to hold above key resistance levels as the outlook for the UK economy remains clouded. The Bank of England remains in tightening mode, but high interest rates are beginning to weigh on growth prospects. While inflation is showing signs of easing, it’s still above the BoE’s target, complicating policy decisions ahead.
Key Drivers of GBP/USD:
– UK inflation declined to 6.2% in July but remains well above the BoE’s 2% target.
– Wage growth continues to put upward pressure on inflation.
– The UK economy remains flat, with GDP growth near zero in Q2 2025.
Technical Landscape:
– Resistance is firm near the 1.2770 level.
– The 50-day EMA is acting as dynamic support near 1.2630.
– A break below 1.2600 could lead to 1.2450, while a push above resistance might open a path toward 1.2900.
Trading Recommendation:
– Bearish pressure dominates below 1.2700, with sellers looking for short opportunities during rallies.
– Consider long positions only if macro data support a rebound and the pair sustains moves above 1
Read more on USD/CAD trading.