Overview: What’s Moving Currencies in August?
August kicks off with renewed focus on central bank policy shifts, lingering inflation concerns, and global growth uncertainty. Following a choppy July, the FX market turns its attention to key U.S. inflation readings, ECB follow-through, and a potential policy pivot from the Bank of Japan.
Key Themes This Month:
- USD: Poised to rebound if inflation holds firm
- EUR/USD: Weakness likely unless ECB surprises hawkishly
- USD/JPY: Elevated volatility around BOJ decision
- GBP/USD: Holding firm amid persistent UK inflation
- Strategy Focus: Trade early setups, prep for late-month volatility
Central Bank Watch: August 2025 Highlights
U.S. Federal Reserve
- Aug 1: PCE inflation
- Aug 13: CPI (Consumer Price Index)
- Aug 21: FOMC Meeting Minutes
Fed Chair Powell remains cautious, but sticky inflation could delay the next rate cut beyond September.
European Central Bank (ECB)
- Market digesting the July 17 rate hold and forward guidance
- Aug 15: Revised Eurozone GDP and inflation projections
Bank of Japan (BOJ)
- July 30–31: Key policy decision
Speculation continues around potential tightening or yield curve control (YCC) tweaks. The yen remains highly sensitive to surprises in guidance or rate changes.
Currency Pair Forecasts: August 2025
USD Outlook
- US Dollar Index (DXY): Currently around 97.25, rebounding from July lows.
- Support: 96.50 | Resistance: 98.00
- View: Slightly bullish. Fed policy and CPI data will dictate short-term path.
EUR/USD
- Current: 1.1715
- Support: 1.1620 | Resistance: 1.1800
- Bias: Bearish-to-neutral. A lack of Eurozone growth and potential dovish ECB signals continue to pressure the euro.
USD/JPY
- Current: 144.35
- Support: 142.50 | Resistance: 147.00
- Risk: High. The July 30–31 BOJ meeting could trigger a breakout if policy shifts materialize. Expect elevated volatility into early August as markets react to guidance and potential yield curve changes.
GBP/USD
- Current: 1.3755
- Support: 1.3620 | Resistance: 1.3900
- Trend: Sideways to mildly bullish. Sticky UK inflation (3.8%) reduces near-term BoE easing odds. Sentiment remains resilient.
USD/CAD
- Current: 1.3610
- Support: 1.3480 | Resistance: 1.3750
- Outlook: Neutral. CAD supported by stable oil prices and a cautious BoC. Watch for movement if WTI breaks $80.
FX Trading Strategy for August
| Week | Strategy Highlights |
|---|---|
| Aug 1–9 | Range-bound moves expected — watch PCE (Aug 1) |
| Aug 10–16 | CPI and Eurozone data in focus (Aug 13–15) |
| Aug 17–23 | FOMC minutes (Aug 21) may trigger USD volatility |
| Aug 24–31 | BOJ meeting (Aug 27) = JPY breakout watch |
Pro Tip: Consider range trades in early August and shift toward breakout setups around major events in weeks 3 and 4.
Top Currency Pairs to Watch
- EUR/USD – Still reactive to central bank divergence
- USD/JPY – Highest volatility potential due to BOJ risk
- GBP/USD – Solid performance likely if inflation stays elevated
What This Means for You
- Importers: Lock in early August if USD rallies after CPI
- Exporters: Hedge exposure before the BOJ and Fed minutes
- Investors: Look for event-driven swings in JPY and EUR pairs
- Travellers: Mid-month USD strength window possible — plan conversions accordingly
FX Outlook: August 2025 FAQ
Will the dollar go up in August?
If CPI remains elevated and the Fed stays cautious, USD could strengthen further.
Is the euro likely to weaken?
Yes, unless the ECB adopts a more hawkish tone or data surprises to the upside.
What’s the biggest risk event in August?
The BOJ’s Aug 27 policy meeting — it could move USD/JPY sharply.
Best time to trade FX in August?
Aug 13–27, around CPI, FOMC minutes, and BOJ policy — expect high-impact moves.
Missed Our July Forecast?
Read the July 2025 Currency Forecast here
Ready to Secure Your August FX Rate?
Don’t let surprise market moves hurt your bottom line.
