Overview: What’s Moving Currencies This Week?
The first full week of August opens with shifting market sentiment as forex traders digest central bank policy decisions, uneven global growth data, and surprising U.S. labor market weakness. With volatility back in focus, this week’s forex forecast highlights key macroeconomic drivers, including the Federal Reserve’s pause, the Bank of England’s rate outlook, and the Reserve Bank of India’s upcoming meeting.
Currency markets began the week recalibrating expectations after July’s U.S. jobs report disappointed, with only 73,000 jobs added versus ~110,000 expected. Traders now price in a >90% probability of a Fed rate cut in September. Meanwhile, the BoE is widely expected to cut rates to 4.00%, and most analysts see the RBI holding rates steady at 5.50%.
Central Bank Watch: Key Policy Events
- Federal Reserve: Rates held at 4.25%–4.50%. Soft job gains and downward revisions triggered renewed dovish sentiment.
- Bank of England (Aug 7): A 25 bp cut is expected after UK inflation dipped to 3.6%, though BoE rhetoric remains cautious.
- Reserve Bank of India (Aug 6): Most expect a hold. However, portfolio outflows and trade pressures may weigh on the rupee.
Currency Pair Forecasts: Week of 4 August 2025
USD Outlook
Dollar Index (DXY): 98.757 Retreating after jobs data miss
Support: 103.00 | Resistance: 105.25
View: Mixed. A soft payroll number and fading economic momentum have erased early gains. Traders await CPI and Fed speakers to gauge next steps.
EUR/USD Forecast
Current: ~1.1510
Support: 1.1400 | Resistance: 1.1600–1.1650
View: Neutral-to-bearish. The euro rebounded on dollar weakness but lacks a strong catalyst. The ECB held rates steady on July 17 and forward guidance remains dovish.
GBP/USD Forecast
Current: ~1.328
Support: 1.3200 | Resistance: 1.3400
View: Cautiously bearish. The market has priced in a BoE cut. A dovish tone could send GBP lower, while any hawkish dissent may offer a bounce. UK economic data remains mixed.
USD/JPY Forecast
Current: ~147.75
Support: 145.00 | Resistance: 150.00
View: Volatile. The yen surged last Friday amid risk-off flows. The BOJ maintained its policy but hinted at inflation traction, opening the door for future tightening.
EUR/JPY Forecast
Current: ~170.8
Support: 165.00 | Resistance: 173.00–175.00
View: Bullish but extended. The cross broke above 2008 highs and may stall near resistance. Momentum depends on continued euro resilience and BOJ stance.
USD/INR Forecast
Current: ₹87.54
Support: ₹87.00 | Resistance: ₹87.80
View: Bullish bias. The rupee weakened due to new U.S. tariffs on Indian goods and capital outflows. Unless the RBI surprises with a cut, USD/INR could test fresh highs.
FX Strategy This Week
Tactical Playbook: Aug 4–10
- Early-week range setups as markets stabilize post-payrolls
- Midweek focus on RBI (Aug 6) and BoE (Aug 7)
- Breakout watch for USD/JPY and EUR/JPY near multi-year levels
- Track DXY trendlines for USD direction
Top Currency Pairs to Watch
- USD/JPY – High volatility following sharp post-NFP reversal
- GBP/USD – BoE tone will dictate trend for sterling
- USD/INR – Central bank and trade tension risks in play
What This Means for You
- Importers: Consider locking in USD rates before CPI or BoE surprises lift volatility
- Exporters: Hedge INR exposure if RBI holds but signals future easing
- Investors: Look for mean reversion trades in overextended JPY and EUR crosses
- Travellers: Week opens with potential dollar softness — midweek might offer better exchange rates
Exchange Rate Forecast 2025: The Macro View
On a longer horizon, analysts remain cautious on the U.S. dollar. Fiscal strain, election-year uncertainty, and a likely Fed pivot could weigh on the greenback. In a recent Reuters survey, over 80% of economists predicted a weaker dollar by mid-2026.
Meanwhile, expectations for modest euro gains (EUR/USD to 1.18) and a yen recovery are growing. Many economists anticipate a BOJ rate hike by year-end, which would reverse decades of ultra-loose policy. For the exchange rate forecast 2025, the tone remains cautiously dollar-negative — but short-term data surprises could challenge that narrative.
Forex Forecast FAQ – Week of 4 August 2025
Will the U.S. dollar go up this week?
It may weaken midweek if Fed cut expectations grow. Early gains faded after weak U.S. jobs data.
What is the EUR/USD prediction for this week?
Neutral to bearish. The euro lacks momentum and faces resistance near 1.1600.
Why is the yen so volatile?
Safe-haven demand and speculation about a Bank of Japan rate hike are driving swings.
Is GBP/USD going up or down?
Slight downside risk. The BoE may cut rates, and dovish guidance could weaken the pound.
What’s the USD to INR outlook this week?
Bullish bias. The rupee is under pressure from U.S. tariffs and capital outflows.
Should I lock in my FX rate now?
Yes, if exposed to USD or INR. Volatility may increase after central bank meetings this week.
