**Mid-Week Forex Outlook: DXY, EURUSD, GBPUSD, and XAUUSD – August 6, 2025**
*By Justin Bennett, Daily Price Action*
As markets move into the second half of the trading week, forex traders remain attentive to the evolving price action across the key pairs and Dollar Index. Geopolitical events, central bank narratives, and technical developments converge to set the stage for potential moves in DXY, EURUSD, GBPUSD, and XAUUSD. This mid-week forex outlook breaks down the significant levels and scenarios to watch for each instrument.
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## US Dollar Index (DXY)
The Dollar Index has been the focal point for many traders, especially with ongoing volatility around economic data and anticipated central bank decisions. The DXY recently found support near its range lows, but buyers seem hesitant to commit, resulting in subdued volatility and an indecisive price structure.
**Key Observations:**
– The DXY continues to oscillate between 104.70 support and 105.85 resistance.
– Price action indicates diminishing momentum after testing 105.50 earlier in the week.
– Recent FOMC commentary has not provided clear direction on rate trajectory, resulting in choppy behavior.
**Technical Outlook:**
– A sustained break above 105.85 could trigger further upside toward 106.40 and potentially 107.10 in the coming sessions.
– If sellers reclaim the 104.70 level, downside risks emerge, with the next support lying at 104.20 and then 103.80.
– The daily RSI has slipped back toward neutral, mirroring the indecision evident on the charts.
**What to Watch:**
– Key economic releases due Thursday and Friday may act as catalysts for a directional move.
– Price stability above 105.50 could encourage buyers, but failure to do so might see a retest of this week’s lows.
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## EURUSD
The EURUSD pair has been contained within a well-defined downward channel for several weeks, oscillating as the Eurozone faces ongoing uncertainties and the US Dollar’s direction remains murky. The pair tested key support early in the week before rebounding, but the longer-term structure points to continued bearish risk.
**Key Observations:**
– The pair is hovering just below the 1.0870 resistance, having found interim support at 1.0800.
– Recent eurozone data gave the common currency a modest lift, yet little sign of a reversal in trend is evident.
– Sentiment remains cautious as traders brace for US data and potential ECB commentary.
**Technical Outlook:**
– Resistance: 1.0870 is the immediate ceiling; a daily close above this would expose 1.0905 and 1.0960.
– Support: 1.0800 remains pivotal, with a breach opening the path toward 1.0750 and possibly 1.0700.
– The downward sloping trendline from June continues to cap near-term rallies.
**What to Watch:**
– A bounce from 1.0800 could produce a range-bound market in the days ahead, unless a macro catalyst provides a breakout.
– Sustained closes below 1.0800 would reinforce the bearish trend.
– Keep an eye on any shifts in central bank tone or geopolitical headlines which often trigger EURUSD volatility.
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## GBPUSD
Sterling has demonstrated some resilience against the US Dollar, consolidating above recent lows, but it has failed to generate a meaningful rally as broad USD performance remains mixed. UK inflation updates and central bank guidance continue to shape expectations.
**Key Observations:**
– GBPUSD rebounded from 1.2785 support but faces stiff resistance near 1.2900.
– The pair is navigating a choppy ascending channel, struggling for follow-through as buyers and sellers battle for control.
– UK economic surprises and Bank of England remarks have added to short-term volatility.
**Technical Outlook
Read more on GBP/USD trading.