**Three Forex Markets to Watch Next Week: July 28, 2025**
By XTB Market Analysts
As we approach the final days of July 2025, financial markets remain highly sensitive to central bank decisions, earnings outlooks, and global macroeconomic shifts. Last week saw notable volatility across currency pairs, equities, and commodities sparked by key earnings reports, inflation data, and shifting monetary policy rhetoric. As we set our sights on the coming week, traders need to keep their attention firmly anchored on three critical markets that may present fresh trading opportunities. These markets include EUR/USD, GBP/USD, and USD/JPY. Here is a comprehensive breakdown of what to watch and how it could impact forex trading strategies in the days ahead.
## 1. EUR/USD – European Inflation and US Interest Rate Outlook
One of the most heavily traded currency pairs globally, the EUR/USD, faces pivotal moves next week. Recent fluctuations have been driven by diverging central bank policy signals, and the upcoming European inflation data may shape the European Central Bank’s (ECB) policy outlook. Concurrently, the US Federal Reserve’s next move remains in focus as its July policy meeting looms.
### Key Events to Watch
– **Eurozone Flash CPI (Consumer Price Index) – July 31, 2025**
– Forecasts currently point to a slight moderation in inflation, but the core CPI remains sticky. If this sticks above the ECB’s 2% target, it could bolster hawkish sentiment.
– A higher-than-expected print may rekindle expectations of another rate hike by the ECB before the end of 2025, thereby supporting the euro.
– A weaker-than-expected CPI would corroborate a dovish outlook, pressuring EUR/USD to the downside.
– **US PCE Inflation – July 30, 2025**
– The Federal Reserve’s preferred inflation gauge may influence whether interest rates remain elevated through Q3 and Q4 of 2025.
– If PCE data reveals persistent underlying inflation, traders may price in a delay in any potential Fed rate cut.
### Technical View
EUR/USD has recently reclaimed the 1.10 psychological barrier, supported by softness in US data and rising European bond yields. The currency pair shows a potential for further medium-term upside.
– Support Zone: 1.0960 – 1.1000
– Resistance Zone: 1.1120 – 1.1150
– Momentum indicators such as RSI and MACD are neutral but slightly tilting bullish. A daily close above 1.1120 could open room for a run toward 1.1250 in the coming weeks.
### Strategy Considerations
– Bullish euro sentiment is contingent on stronger inflation or hawkish ECB speakers.
– Dollar strength could return if incoming US inflation data surprises to the upside.
– Traders should monitor the spread between German bond yields and US Treasuries as a proxy of interest rate divergence.
## 2. GBP/USD – Bank of England Rate Decision and Recession Risks
The British pound remains caught between resilient wages and sluggish economic growth. As markets eye the Bank of England’s (BoE) policy decision on August 1, 2025, GBP/USD could experience significant fluctuations.
### Key Events to Watch
– **Bank of England Monetary Policy Meeting – August 1, 2025**
– Markets are currently pricing in a 25-basis-point hike with strong probability, but commentary on inflation trajectories and economic slack will be key in determining the pound’s future direction.
– Traders should listen closely to BoE Governor Andrew Bailey’s remarks. If he emphasizes risks of stagflation or hints at a policy pause later this year, it may weigh on GBP/USD.
– **UK Services PMI Final Reading – July 31, 2025**
– Services, constituting approximately 80 percent of the UK economy, offer crucial insight into real-time activity.
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