Title: Forex Pairs in Focus: Weekly Technical Outlook (31 August – 5 September 2025)
Source: Adapted and expanded from an article by DailyForex
Original Author: Christopher Lewis
The foreign exchange market continues to display uncertainty and volatility as traders adjust to changes in global monetary policy, inflationary pressures, and geopolitical tensions. For the week of August 31 to September 5, 2025, key Forex pairs offer unique trading opportunities as they react to advancing macroeconomic data and technical signals. Below is an in-depth analysis of some of the most closely watched currency pairs heading into the beginning of September, with technical setups and potential trigger levels that may influence the markets.
EUR/USD – Neutral Momentum with Possibility of Consolidation
The EUR/USD pair has been catching investors’ attention due to its struggle around the 1.0900 psychological level. Despite bullish attempts, the pair faces headwinds from both the European Central Bank’s dovish orientation and slightly easing US inflation numbers.
Key Technical Observations:
– The pair has been testing the descending trendline on the daily chart that began earlier in the year.
– Support is firmly established near the 1.0850 level, with additional zones around 1.0800 should the pair break lower.
– Resistance remains at 1.0950 and then 1.1000, levels which have capped the rallies in recent sessions.
Potential Market Drivers:
– European CPI updates could show how entrenched inflation is within the eurozone.
– Any commentary from the ECB on interest rate trajectory might determine bullish or bearish sentiment shifts.
– US Non-Farm Payroll (NFP) data and additional labor market statistics will be crucial in shaping dollar strength.
Trading Strategy:
– Sideways movement may dominate the early part of the week, making range-bound strategies viable.
– Breakout traders should monitor a move above 1.0950 for bullish confirmation or below 1.0850 for signs of further downside.
GBP/USD – Bullish Bias with Strong Resistance at Key Levels
Sterling has shown relative strength compared to other majors, driven by hawkish sentiment surrounding the Bank of England. The GBP/USD pair is holding above its upward trendline, but faces short-term resistance that may cap further gains.
Key Technical Observations:
– Psychological resistance near 1.2800 remains intact, followed by structural highs around 1.2900.
– Support lies beneath at 1.2650 and 1.2575, with both zones offering buying opportunities on dips.
– RSI nearing overbought territory on the 4-hour chart, which could indicate a brief retracement or consolidation phase.
Potential Market Drivers:
– UK Manufacturing and Services PMI figures could provide insight into domestic economic conditions.
– Any unexpected BoE commentary regarding rate hikes may strengthen Sterling further.
– US Dollar Index (DXY) fluctuations need to be monitored as they directly correlate to GBP/USD performance.
Trading Strategy:
– Consider taking long positions on pullbacks toward 1.2650 with tight stop losses under 1.2575.
– Bearish short-term trades may be viable if the pair fails at 1.2800 for three consecutive sessions.
USD/JPY – Dollar Strength Consolidated, but Yen Intervention Risk Remains
The USD/JPY remains one of the more volatile pairs, as rumors of potential Japanese currency intervention continue to swirl, even as the US dollar asserts its dominance. The pair has broken above 147.00, a level previously viewed as a tipping point for BoJ involvement.
Key Technical Observations:
– Consolidation between 146.50 and 147.80 characterized recent price action.
– Daily chart signals fading momentum with Doji and spinning top candlesticks forming at highs.
– MACD histogram indicates a narrowing bullish divergence, suggesting limited upside unless fresh momentum emerges.
Potential Market Drivers:
– Japan’s inflation data and potential policy remarks from the BoJ could create volatility.
– US yields maintain a strong
Explore this further here: USD/JPY trading.