Weekly Forex Forecast: August 17th to August 22nd, 2025
By: Nathan Smith | Source: DailyForex.com
The week from August 17th to August 22nd, 2025, promises to present a mixture of opportunities and risks in the Forex markets. Traders should be prepared for potential volatility driven by macroeconomic data, central bank commentary, and geopolitical tensions. Within this context, many major currency pairs show technical setups that may offer profitable trade opportunities.
This analysis will cover major currency pairs including EUR/USD, GBP/USD, USD/JPY, AUD/USD, and USD/CAD. Each is examined from a technical perspective, while also incorporating key fundamentals expected to move prices throughout the week.
EUR/USD Analysis
The EUR/USD pair closed last week with modest bullish momentum, pushing closer to resistance levels despite a quiet fundamental backdrop. The pair benefitted from growing market expectations that the European Central Bank might maintain its current interest rate policy despite sluggish economic indicators.
Key Considerations:
– Resistance zones: 1.1000 and 1.1040
– Support levels: 1.0880 and 1.0835
– RSI remains close to neutral (50-level), indicating possible extended sideways movement
Technical Outlook:
– The pair continues to trade slightly above its 50-period moving average on the daily chart, suggesting a mild bullish bias.
– However, momentum indicators such as the MACD hint at a slowing upward trajectory, calling for caution on aggressive long entries.
– A break above 1.1040 could activate further upside toward 1.1100, while a drop below the 1.0880 support would reintroduce bearish pressure.
Fundamental Outlook:
– No major Eurozone economic events are scheduled for the early part of the week, though traders should keep an eye on ECB officials’ commentary.
– In the US, the focus will be on the release of the Federal Reserve’s meeting minutes. Any dovish tone may support further upside for EUR/USD.
Trade Strategy:
– Bullish scenario: Buy on dips near 1.0880 or on breakout above 1.1040 with targets at 1.1100.
– Bearish scenario: Short positions may be considered below 1.0880, targeting 1.0835 initially.
GBP/USD Analysis
Sterling experienced some strength last week, climbing modestly against the US dollar as UK wage and inflation data surprised to the upside. This has reignited speculation that the Bank of England may not cut rates as soon as previously anticipated.
Key Levels:
– Resistance: 1.2820 and 1.2900
– Support: 1.2700 and 1.2600
Technical Outlook:
– GBP/USD remains above both the 20-day and 50-day EMAs, preserving its bullish structure.
– Price action shows a bullish flag on the 4-hour chart near the 1.2820 zone, which, if broken, could signal further rally toward 1.2900.
– RSI sits around 60, indicating room for additional upside before overbought conditions kick in.
Fundamental Focus:
– UK Retail Sales data is due this week, which could influence trader sentiment. A stronger-than-expected reading would back a hawkish BoE outlook.
– Developments around UK-EU trade negotiations may also trigger Sterling moves, particularly headlines related to Northern Ireland trade.
Trade Strategy:
– Long positions on a confirmed breakout above 1.2820 with a target at 1.2900.
– Alternatively, buying dips near 1.2700 with conservative stop-loss protects against reversal.
– Bearish trades should only be considered if the pair decisively drops below 1.2600.
USD/JPY Analysis
USD/JPY saw a return to the 146.80 area last week, after a sharp retracement from 148.50 earlier. The pair
Explore this further here: USD/JPY trading.