Weekly FX Report Summary – 25 Aug 2025

Bank FX views in one page, covering the key drivers, clear bias by pair, and the week’s events that move markets.

USD

The dollar softened as the policy narrative shifted toward Fed easing into September and December, with markets fading USD rallies. Strategists emphasise cooling US growth and diminishing USD exceptionalism as key drivers near term. Trading implication: sell USD strength into data that does not challenge the easing path.

EURUSD

Eurozone PMIs showed continued improvement and manufacturing finally ticked above 50, pointing to gradual stabilisation. With the ECB likely done cutting this year while the Fed heads toward easing, relative rates and improving sentiment keep EURUSD biased higher. Pullbacks remain buyable while the data trend holds.

GBPUSD

The BoE cut to 4.00% in August and guided a careful and gradual cycle. Mixed UK growth and sticky services inflation argue for another cut in November, but narrowing US‑UK spreads and resilient services keep GBP supported on dips.

USDJPY

Yen support improved as US yields drifted lower and the policy gap starts to narrow. Banks still see the Fed’s cutting cycle as the dominant driver for USDJPY over 6–12 months, with forecasts skewed toward 140–138 as spreads compress. Near‑term risk is choppy ranges, medium‑term tone is lower.

AUDUSD

The RBA delivered a 25 bp cut in August and the market prices a few more by year end. Australia’s terms of trade have inched better while China’s growth has softened, leaving AUD mostly a USD story near term. Baseline path is a grind higher toward the high‑0.60s on USD weakness.

NZDUSD

The RBNZ surprised dovish, signalling further cuts after August. That shift knocked NZD, though the Powell‑driven USD dip cushioned the blow. Banks expect NZD to stay heavy into the next RBNZ meetings, then stabilise as the easing cycle matures.

USDCAD

USDCAD was range‑bound through summer. With BoC easing front‑loaded and USD overvaluation flagged by some desks, risks skew mildly lower near term if US data underwhelms. Oil and US rates remain the key gears.

Other Pairs

SEK: Weak domestic growth and a dovish bias keep SEK on the back foot. Several desks keep an upward EURSEK profile with a 12‑month bias toward 11.40.

NOK: Norges Bank has started easing and further cuts are pencilled in. Structural headwinds and softer real rates keep EURNOK tilted higher, with talk of moves back above 12.00 over time.

CHF: Watch SNB intervention risks and trade headwinds. Signals suggest CHF underperformance if the USD leg softens broadly.

Bias Table

Key Event Outlook

United States

• Core PCE (Fri): A print near 2.9% y/y would validate gradual Fed easing and keep USD rallies short lived.
• Consumer confidence, durables: Soft prints reinforce the easing bias and weigh on USD.

Eurozone

• Flash CPI (Fri): Headline seen nudging to roughly 2.1% y/y, with core steady. Upside risk could temper EUR, downside keeps EUR supported via rates.

United Kingdom

• Light calendar: Market focuses on early‑September data for cues on a November BoE move.

Japan

• Tokyo CPI, Retail Sales, Industrial Production (Fri): Softer prints reduce BoJ pressure and support lower USDJPY over time.

Australia

• Monthly CPI (Wed): A tame read keeps RBA easing expectations intact and supports AUD on a softer USD backdrop.

New Zealand

• Near‑term focus: Retail sales and survey data this week. Next key policy dates are 8 Oct and 26 Nov for RBNZ.

Canada

• GDP (Fri): Growth tone critical for USDCAD near term alongside oil and US rates.