This article is a rewritten and expanded version of the original titled “Pairs in Focus: 27th July to 01st August 2025,” authored by Crispus Nyaga, published on DailyForex.com. The purpose of this rewrite is to analyze in greater detail the key forex currency pairs likely to experience significant volatility and price movement during the week of July 27 through August 1, 2025. Credit goes to the original author, Crispus Nyaga, for the foundational analysis.
Overview of the Forex Market Outlook: Late July into Early August 2025
As markets close out the month of July and transition into August, forex traders should remain aware of a blend of technical indicators and fundamental events that could dictate direction for major currency pairs. Several core themes are likely to drive volatility during this time frame, including:
– The U.S. Federal Reserve’s upcoming monetary policy announcement
– Continued developments related to global inflation and shifting interest rate expectations
– Japan’s economic data performance and the yen’s depreciation
– The persistent strength or weakness of European inflation figures amid ECB policy stance
– Technical consolidations versus breakout scenarios across key charts
The following sections take a close look at several major currency pairs for the upcoming week.
1. EUR/USD
The euro-dollar pair is once again consolidating, although signs continue to show potential downside pressure. Over the previous weeks, the pair has ended trading sessions relatively flat, driven by growing uncertainty regarding European economic stability and the strength of the US dollar.
Key Drivers:
– Eurozone inflation data remains relatively muted, reducing pressure on the European Central Bank (ECB) to aggressively tighten monetary policy further.
– In contrast, the US dollar is gaining support amid expectations that the Federal Reserve could maintain higher interest rates longer due to lingering inflationary pressures.
– Flash CPI (Consumer Price Index) readings from Germany and France will be critical this week in shaping short-term Euro trajectory.
Technical Outlook:
– The EUR/USD is hovering near a critical support zone around 1.0850.
– A break below this level could trigger selling pressure toward 1.0790, followed by deeper support around 1.0720.
– On the upside, resistance lies at 1.0940, and a break above this could open a possible move toward 1.1030.
List of Technical Indicators to Watch:
– Relative Strength Index (RSI): currently neutral to slightly bearish
– 50-day Exponential Moving Average (EMA): providing dynamic resistance
– MACD (Moving Average Convergence Divergence): slightly bearish crossover
2. USD/JPY
One of the most closely watched currency pairs continues to be the dollar-yen due to the Bank of Japan’s ongoing dovish monetary stance. The Japanese yen has shown signs of extended weakness against most currencies, particularly USD, as policymakers remain reluctant to shift from their accommodative framework.
Key Market Influences:
– The Bank of Japan’s reluctance to raise interest rates or tighten monetary policy despite global tightening trends
– Strong U.S. economic indicators, including rising consumer sentiment and employment data
– Intervention risk: Japanese authorities continue to warn speculators in the FX markets, increasing short-term uncertainty in USD/JPY moves
Technical Viewpoint:
– USD/JPY continues its long-term uptrend, reaffirming bullish behavior in most timeframes
– Immediate resistance is seen around 161.20. A break above this could push the pair toward 162.80, a level not seen in decades
– Support sits around 158.70, which coincides with a recent demand zone
Watch These Developments:
– Market reaction to Japan’s Retail Sales and Tokyo CPI due later this week
– Short-term divergence developing between price and RSI, hinting at possible cooling
– Fibonacci retracement levels suggest minor pullbacks may find buyers clustered near 159.50
3. GBP/USD
The British pound continues to show resilience against the U.S. dollar, despite political risks and mixed
Read more on EUR/USD trading.