Title: Weekly Forex Forecast – August 24 to 29, 2025
By: DailyForex.com (Original author: Christopher Lewis)
Adaptation and expansion of original analysis.
Overview
The Forex market continues to respond to global economic shifts, monetary policies, and geopolitical influences. As we step into the final week of August 2025, key currency pairs display mixed technical indicators influenced by inflation data, central bank rhetoric, and shifting market sentiment. Traders should anticipate volatility and look for confirmation of trends before committing to positions. This week’s forecast explores the potential trajectories of major pairs including EUR/USD, GBP/USD, USD/JPY, AUD/USD, and others.
This weekly outlook is informed by the original analysis from Christopher Lewis at DailyForex.com.
Forex Market Highlights:
– Federal Reserve policy and U.S. economic data continue to be top drivers of USD strength and volatility.
– The ECB and BoE remain cautious, with investors looking for dovish or hawkish cues in their upcoming statements.
– Commodities are rebounding, affecting commodity-linked currencies like the AUD, CAD, and NZD.
– Geopolitical tensions in East Asia and political instability in the Eurozone are adding layers of uncertainty.
EUR/USD Forecast (Euro/US Dollar)
The EUR/USD pair concluded last week with notable bearish momentum, testing near the 1.0800 support level. The sluggish recovery of Germany’s economy, compounded with the European Central Bank’s dovish stance, has limited upside for the euro. U.S. GDP data and inflation metrics sustained the dollar’s dominance.
Key Technical Levels:
– Resistance: 1.0900 and 1.1000
– Support: 1.0800 followed by 1.0750
Outlook:
– Traders can anticipate this pair to remain under pressure unless the ECB offers unexpectedly hawkish guidance. U.S. rate expectations, currently sticky, still favor the dollar.
– The pair might test 1.0750 support if bearish momentum continues.
– A sustained break above 1.0900 may lead to a short-term recovery toward 1.1000, but upside remains limited barring a fundamental shift.
Technical Indicators:
– RSI hovering below 50, indicating a lack of bullish momentum.
– 50-day EMA above the price action, further confirming the downtrend.
Trading Strategy:
– Bearish bias remains intact unless the price closes decisively above 1.0900.
– Sell on rallies near resistance levels with tight risk management.
GBP/USD Forecast (British Pound/US Dollar)
Despite better-than-expected headline inflation data out of the UK, the GBP/USD pair failed to capitalize on this optimistic economic print. The British pound remains vulnerable, primarily due to expectations that the Bank of England may begin loosening its monetary policy in early Q4.
Technical Landscape:
– Immediate Support: 1.2600
– Resistance Zones: 1.2730 and 1.2850
Forecast Expectations:
– The pair will likely trend lower unless it can sustain movement above the 1.2730 resistance.
– Weakening fiscal data and political scandals in the UK continue to cast doubt on sterling stability.
Market Drivers:
– U.S.-UK interest rate differentials currently favor the dollar.
– Political instability within the UK government serves as a bearish undercurrent for the pound.
Technical Indicators:
– Momentum indicators show indecisiveness, with MACD lines showing a slight bearish cross.
– Price action remains below the 50-day moving average, confirming lack of strength.
Trading Setup:
– Look for short positions below 1.2730 with targets near 1.2600.
– Only a move above 1.2850 could negate the current negative outlook.
USD/JPY Forecast (US Dollar/Japanese Yen)
USD/JPY remains in a strong uptrend, backed by divergent monetary policies between the Federal Reserve and the Bank of Japan. The yen continues to underperform due to ultra-loose BoJ policy
Read more on EUR/USD trading.