**Forex Mid-Week Outlook: DXY, EURUSD, GBPUSD & XAUUSD (August 20, 2025)**
*By Justin Bennett – Originally published at Daily Price Action*
As we navigate through the third week of August, Forex markets continue to reflect ongoing reactions to economic data, central bank policy shifts, and evolving risk sentiment. In this mid-week outlook, we analyze the technical and fundamental landscape for the US Dollar Index (DXY), EURUSD, GBPUSD, and XAUUSD (Gold). This analysis aims to provide traders with actionable levels, possible scenarios, and a sense of direction as we approach the second half of the trading week.
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**The US Dollar Index (DXY): Stalling at Key Resistance**
The DXY, which measures the value of the US dollar against a basket of major currencies, started the week with slight bullish momentum. However, significant resistance levels are beginning to impede further gains, while economic data and changing market sentiment add layers of uncertainty.
Key Highlights:
– The DXY recently tested the 106.50 resistance zone, which has proven pivotal since early June.
– Daily closes above this level have been scarce, and each attempt has been met with profit-taking and renewed selling pressure.
– On the downside, the 104.20 support area remains vital. A break below could accelerate bearish momentum.
– The 100-day and 200-day exponential moving averages cluster near 105.20, offering dynamic support in the event of short-term pullbacks.
– RSI is hovering close to the overbought region, signaling potential exhaustion of the current rally.
Fundamental Catalysts:
– US CPI data earlier in August showed inflation progressing within expectations, giving the Federal Reserve some breathing room.
– FOMC meeting minutes highlighted a reluctance toward additional rate hikes barring significant inflation surprises.
– Market participants are watching for Friday’s Jackson Hole Symposium remarks, which could determine the dollar’s short-term trend.
Trading Scenarios:
– A sustained close above 106.50 would open up 107.80 as the next technical target.
– Failure to break out and a close below 104.20 may suggest further downside, potentially extending toward 102.70.
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**EURUSD: Range-Bound but at a Decision Point**
EURUSD, the most heavily traded currency pair in the world, remains caught in a well-defined range, waiting for a catalyst to establish a directional move. The pair has been sensitive to Eurozone economic data and shifting risk sentiment, with traders weighing the prospects for further European Central Bank (ECB) accommodation versus the Federal Reserve’s steady hand.
Technical Summary:
– The trading range between 1.0800 and 1.0980 has effectively contained price action for more than a month.
– The 1.0900 level serves as mid-range resistance, capping any short-lived rallies.
– Weekly chart structure reveals a descending channel that began in early June, suggesting the broader trend still tilts to the downside.
– The 50-day EMA, now just above 1.0870, is flattening, indicating a lack of strong momentum in either direction.
Key Eurozone Developments:
– German ZEW Economic Sentiment and European GDP data have disappointed, fueling concerns of persistent stagnation.
– Easing energy prices have modestly improved the region’s inflation outlook, reducing the urgency for ECB intervention.
– Political instability in parts of the Eurozone introduces intermittent volatility, but has yet to trigger a decisive move.
Potential Trade Setups:
– Bullish above 1.0980, with a clear close above this level potentially triggering a short squeeze toward 1.1060.
– Bearish if the 1.0800 floor gives way, with downside extensions toward 1.0720.
– Range traders may find opportunities to fade moves at the edges, using tight stop losses.
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**GBPUSD: Finding Its Footing Amid Rate Speculation**
Sterling has been
Read more on GBP/USD trading.