Title: In-Depth Weekly Forex Forecast: August 24–29, 2025
Author Credit: Original analysis by Adam Lemon, DailyForex.com. Content enhanced and expanded for better clarity and depth.
Overview:
The upcoming trading week, spanning from August 24 to August 29, 2025, presents a range of potentially influential market movements across major currency pairs. Traders must be prepared as economic events and central bank policies continue to shape Forex trends. This article delves deeper into technical indicators, fundamental updates, and sentiment trends for major Forex pairs, inspired by Adam Lemon’s insightful report for DailyForex and enhanced with broader macroeconomic context and extended market analysis.
USD Outlook: Neutral to Bullish
The US Dollar Index (DXY) has exhibited relative strength in recent weeks, holding gains attributed to robust economic data and persistent speculation over future actions by the Federal Reserve.
Key Developments:
– Recent U.S. inflation data remains above the Fed’s 2% target.
– Employment statistics continue to point to a tight labor market.
– July’s Retail Sales showed a solid month-over-month increase of 0.7%.
– Fed officials have maintained a hawkish tone in public remarks.
– Market pricing suggests only a small probability of multiple rate cuts by the end of 2025.
Technical Outlook:
– The DXY remains supported above the 104.00 psychological level.
– Bullish continuation is possible if the index breaks above 105.30, which has resisted several recent rallies.
– Key support lies at 103.00; a break below this level could reverse current momentum.
Contrasting opinions among Fed policymakers and uncertainty over inflation expectations could inject volatility into USD pairs.
Currency Pair Breakdown
EUR/USD: Bearish Bias Emerging
After an extended run-up earlier in the year, the EUR/USD pair has recently lost momentum. A divergence in monetary policies between the European Central Bank (ECB) and the Federal Reserve is becoming increasingly relevant.
Fundamentals:
– ECB officials hinted at pausing further rate hikes due to signs of stagnation in Eurozone GDP growth.
– Recent PMI readings from Germany and France indicate contraction in the manufacturing sector.
– Inflation in the Euro area remains sticky but is not prompting aggressive ECB rhetoric.
Technical Landscape:
– Price action is trapped below the 1.0900 level, forming a descending triangle pattern.
– A sustained break below 1.0800 could open the path toward 1.0650.
– Resistance sits at 1.0950, and a rejection from that area could strengthen bearish momentum.
Trading Strategy:
– Short bias favored below 1.0850, targeting 1.0700.
– Long positions should only be considered above 1.0950 with a tight stop.
GBP/USD: Sideways with Mild Bullish Tilt
Sterling has exhibited relative stability despite signs of economic hardship in the UK. Persistent inflation, however, has forced the Bank of England (BoE) to maintain a hawkish stance, propping up the currency against broader weakness.
Fundamental Spotlight:
– UK CPI remains well above the central bank’s target at 5.1% YoY, giving the BoE little room for rate cuts.
– Wage growth remains high, putting further pressure on core inflation.
– Political uncertainty is minimal, lending support to the pound.
Technical Indicators:
– The pair is moving within a symmetrical triangle, bounded between 1.2620 and 1.2775.
– A close above 1.2800 could trigger bullish acceleration toward 1.2950.
– Rejection at resistance levels could bring the pair back to the 1.2500 support zone.
Takeaways:
– Neutral to slightly bullish view unless the pair fails to hold above 1.2650.
– Traders may consider breakout trades aligned with momentum indicators.
USD/JPY: Strong Bullish Momentum Persists
One of the strongest trending pairs in recent weeks, the USD/JPY continues to rise as
Read more on USD/CAD trading.