Weekly Forex Market Forecast: August 24–29, 2025
By: Adam Lemon (Original Author, DailyForex)
The upcoming trading week of August 24–29, 2025, presents a mixed landscape in the Forex market as central bank policies continue shaping global exchange rate dynamics. Investor focus remains sharply tuned to upcoming data releases from key economies, as well as broader macroeconomic trends, especially in inflation, employment, and interest rates. In this forecast, we delve into the key currency pairs, analyze prevailing technical patterns, and explore macroeconomic insights to help traders position themselves effectively in this environment.
Key Market Themes
1. Central Bank Divergence
– With inflation still hovering above targets in the US and UK, and Japan continuing its ultra-accommodative stance, currency traders remain focused on the diverging policies among central banks.
– The US Federal Reserve signaled it may hold interest rates higher for longer unless inflation shows more consistent progress toward the 2 percent target.
– The European Central Bank remains cautious, despite moderating inflation, and is unlikely to cut rates before Q4 unless economic activity weakens drastically.
– The Bank of Japan remains the outlier among G10 central banks, keeping rates near zero, which continues to pressure the yen.
2. Risk Sentiment and Safe-Haven Flows
– Renewed tensions in the Taiwan Strait and sluggish growth in the Chinese economy have spurred increased demand for safe-haven assets, such as the US dollar and Swiss franc.
– Equities have shown volatility in August as markets digest weaker tech earnings and concerns over rising energy prices resurging in Europe.
– As risk sentiment continues to fluctuate, traders are rotating between commodity currencies (like AUD and NZD) and traditional havens depending on broader geopolitical and financial stability.
3. Economic Data to Watch
– US Core PCE Price Index (August 29)
– German Ifo Business Climate Survey (August 26)
– UK GfK Consumer Confidence (August 24)
– Japanese Inflation Data (August 29)
– Canadian GDP Data (August 29)
Major Currency Pairs: Weekly Technical Outlook
EUR/USD
Last Week’s Close: 1.0865
The euro lost ground against the US dollar last week as mixed PMI data from across the Eurozone painted a weak growth outlook. Germany’s manufacturing sector continues to shrink, while services remain tepid.
Technical Overview:
– Resistance Levels: 1.0900, 1.0955
– Support Levels: 1.0830, 1.0785
– The pair remains in a short-term bearish trend, with the 50-day moving average hovering below the 200-day, confirming downward momentum.
– RSI at 42 suggests moderate downside room before becoming oversold.
– A break below 1.0785 could open the door to a test of the 1.0700 psychological level.
Fundamental Outlook:
– The ECB’s willingness to hold rates may lead to weakness unless there is an unexpected improvement in Eurozone growth metrics.
– If US Core PCE shows elevated prices, the dollar could strengthen further.
GBP/USD
Last Week’s Close: 1.2640
The British pound recovered some ground toward the end of last week after UK retail sales surprised slightly to the upside, but overall remains under pressure amid downward revisions to earlier employment numbers.
Technical Overview:
– Resistance Levels: 1.2680, 1.2740
– Support Levels: 1.2590, 1.2525
– The pair is oscillating around the 100-day moving average.
– Bollinger Bands are tightening, indicating a volatility breakout may be imminent.
– MACD remains in bearish territory but could be crossing the signal line, suggesting consolidation or reversal possible.
Fundamental Outlook:
– Economic uncertainty remains high ahead of the final BoE rate decision for Q3.
– Consumer confidence
Read more on USD/CAD trading.