Sample Category Title

On Friday, the GBP/USD pair declined to 1.3401 after strong gains earlier in the week. The previous rally was triggered by July business activity data, which showed the best performance in a year, mainly supported by the services sector.

The release came alongside fresh UK inflation statistics, which briefly lifted sterling. However, economists noted that the price acceleration was largely driven by airfare increases rather than broad-based inflationary pressure, meaning its effect on the Bank of England policy remains limited.

Money markets are currently pricing in less than a 50% chance of a rate cut before the end of 2025. The probability of a 25-basis-point cut this year stands at only 36%, while investors do not expect the next move in interest rates before spring 2026. Since the start of 2025, the pound has already gained almost 8% against the US dollar.

Technical analysis of GBP/USD

The market built a consolidation range around 1.3472 and broke it to the downside. A decline to 1.3350 is possible, followed by a correction bounce back to 1.3472. The downtrend may later extend to 1.3270. This outlook is supported by the MACD indicator, whose signal line remains below zero and is pointing sharply downwards, confirming bearish momentum.

On the H1 timeframe, the market nearly completed a corrective wave at 1.3594 before starting a new downward movement. A decline to 1.3350 is expected, after which a short-term pullback to 1.3472 is likely. The Stochastic oscillator confirms this view: its signal line is below 50, moving downwards towards 20, indicating further downside pressure.

Summary

After a strong rally, GBP/USD entered a corrective phase. Technical indicators suggest a bearish outlook with 1.3350 and 1.3270 as key downside targets, while 1.3472 may serve as a corrective rebound level.

On Monday, we:

→ noted that the US Dollar Index (DXY) was consolidating at the start of a week packed with key events;

→ outlined a descending channel (shown in red);

→ highlighted that the price was trading around the channel’s median line, signalling a balanced market;

→ suggested that a test of one of the quarter lines (QL or QH), which divide the channel into four parts, could take place.

As the DXY chart indicates, since then the balance has shifted in favour of buyers, with the price forming an upward trajectory (shown in purple lines) and breaking through short-term resistance R (which has now turned into support, as marked by the blue arrow). Support line S remains relevant.

Today brings the key event that may have the greatest impact on the US Dollar Index (DXY) this week – Jerome Powell’s speech at the annual Jackson Hole Symposium.

This appearance is particularly significant because:

→ it is likely to be Powell’s last speech after seven years as Fed Chair, with his term expiring in May amid ongoing tensions with President Trump;

→ market participants will closely monitor the tone of his remarks, as a rate cut is expected in September, while recent economic data – namely the rise in the Producer Price Index – suggest that the US economy could face renewed inflationary pressures due to Trump’s tariffs.

Technical analysis of the DXY chart

From a bullish perspective, in the short term the US dollar is advancing within the purple channel, supported by:

→ the lower boundary of this channel;

→ the demand imbalance zone in favour of buyers (shown in green), confirmed by yesterday’s sharp bullish candle.

From a bearish perspective:

→ the RSI has entered overbought territory;

→ bullish momentum may fade after a breakout above the QH line;

→ a key resistance at the 99 level lies nearby – a level that reclaimed its role as resistance at the beginning of August (indicated by black arrows).

A corrective pullback in the US Dollar Index (DXY) could happen after its rally to the highest level since 6 August. However, the further trajectory will largely depend on Powell’s words this evening. According to Forex Factory, the speech is scheduled for 17:00 GMT+3.

Trade global index CFDs with zero commission and tight spreads. Open your FXOpen account now or learn more about trading index CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

The Japan 225 CFD Index (a proxy of the Nikkei 225 futures) rallied as expected and hit the first resistance level of 43,560 as mentioned in our previous report. It printed a fresh intraday record high of 43,943 on Monday, 18 August.

Thereafter, it staged a decline of -4% to record an intraday low of 42,330 on Friday, 22 August, before it recovered to an intraday level of 42,570 at the time of writing.

Several technical elements and a fundamental factor suggest that the ongoing 5-day decline is likely a minor corrective decline within its medium-term uptrend phase rather than the start of a medium-term bearish trend.

Fig. 1: Japan 225 CFD Index minor trend as of 22 Aug 2025 (Source: TradingView)

Fig. 2: Nikkei 225 component stocks above 200-day as of 22 Aug 2025 (Source: MacroMicro)

Fig. 3: Japan Citigroup Earnings Revision Index as of 15 Aug 2025 (Source: MacroMicro)

Preferred trend bias (1-3 days)

Maintain a bullish bias with short-term pivotal support at 42,000/41,760 for the Japan 225 CFD Index, and a clearance above 43,060 sees the next intermediate resistances coming at 43,470 and 44,050/44,110 (Fibonacci extension cluster levels) (see Fig. 1).

Key elements

• The 42,000/41,760 key support zone is likely an inflection point, a potential bullish reversal as it confluences with the 20-day moving average and 50% Fibonacci retracement of the prior minor up move from 1 August 2025 low to 18 August 2025 high.
• The hourly RSI momentum indicator has traced out a bullish divergence condition after it dropped towards its oversold region on Wednesday, 20 August. These observations suggest bearish momentum of the ongoing 5-day decline has started to ease.
• Market breadth has continued to improve; the percentage of the Nikkei 225 component stocks trading above their respective key 200-day moving averages has increased steadily since 1 August’s print of 74% to 82% as of Friday, August (see Fig. 2).
• Analysts, on average, have continued to upgrade their earnings outlook on Japanese corporations. The Citigroup Earnings Revision Index has been on a path of a steady uptrend since 18 April 2025’s 5-year low of -0.72; it has jumped to 0.37 as of 15 August 2025 from -0.19 printed on 18 July 2025 (see Fig. 3).

Alternative trend bias (1 to 3 days)

A break below the 41,760 key support invalidates the bullish recovery to see an extension of the corrective decline to expose the 41,275/41,070 medium-term support zone.

Daily Pivots: (S1) 198.31; (P) 198.77; (R1) 199.45; More...

GBP/JPY recovered after brief dip to 197.84 and intraday bias is turned neutral first. More consolidations could be seen and below 197.84 will bring deeper pullback. But overall, near term outlook will stay bullish as long as 195.01 support holds. On the upside, firm break of 200.26 will resume the whole rise from 184.35 to 100% projection of 180.00 to 199.79 from 184.35 at 204.14.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a correction to rally from 123.94 (2020 low). The pattern might still extend with another falling leg. But in that case, strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. Meanwhile, decisive break of 208.09 will confirm long term up trend resumption.

Daily Pivots: (S1) 171.70; (P) 172.03; (R1) 172.54; More...

Intraday bias in EUR/JPY remains neutral as range trading continues. On the upside, above 172.99 will resume the rebound from 169.69 to retest 173.87 high. On the downside, however, firm break of 170.94 will suggest that the corrective pattern from 173.87 has started the third leg. Intraday bias will be turned back to the downside for 169.69 support, and possibly below. But downside should be contained by 38.2% retracement of 161.06 to 173.87 at 168.97 to bring rebound.

In the bigger picture, considering current strong momentum as seen in the rally from 154.77, corrective pattern from 175.41 could have already completed. Decisive break of 154.77 will confirm long term up trend resumption. Next target is 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. However, rejection by 175.41, followed by firm break of 55 D EMA (now at 169.95) will delay this bullish case.

Daily Pivots: (S1) 0.8644; (P) 0.8656; (R1) 0.8665; More...

Intraday bias in EUR/GBP remains mildly on the upside for the moment. Corrective pattern from 0.8752 should have completed at 0.8595 after hitting 38.2% retracement of 0.8354 to 0.8752 at 0.8600. Further rise should be seen to retest 0.8752. Firm break there will resume larger rebound from 0.8221. For now, risk will stay on the upside as long as 0.8595 support holds, in case of retreat.

In the bigger picture, the structure from 0.8221 medium term bottom are not impulsive enough to suggest that it's reversing the down trend from 0.9267 (2022 high). But even if it's a correction, further rise is expected to 61.8% retracement of 0.9267 to 0.8221 at 0.8867. This will remain the favored case as long as 55 W EMA (now at 0.8501) holds.

Daily Pivots: (S1) 1.8041; (P) 1.8099; (R1) 1.8136; More...

Intraday bias in EUR/AUD is turned neutral first with current retreat. Further rally is expected as long as 1.7942 support holds. Above 18155 will target 61.8% projection of 1.7245 to 1.8094 from 1.7671 at 1.8196. Sustained break there will extend the rally from 1.7245 to 100% projection at 1.8520, which is close to 1.8554 high. However, break of 1.7942 will bring deeper fall back to 1.7671 support instead.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Such pattern could extend further with another falling leg. But even in that case, downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Uptrend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.9365; (P) 0.9380; (R1) 0.9402; More....

Intraday bias in EUR/CHF is turned neutral first with current recovery. On the downside, sustained trading below 55 D EMA (now at 0.9366) will the rebound from 0.9218 has completed, and target 0.9265 support for confirmation. Nevertheless, break of 0.9400 support turned resistance will bring retest of 0.9452 resistance.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. However, with bullish convergence condition in W MACD, downside potential should be limited in case of another fall. Instead, firm break of 0.9660 resistance will be an important sign of medium term bullish trend reversal.

Daily Pivots: (S1) 1.3882; (P) 1.3897; (R1) 1.3926; More...

USD/CAD's rally continues today and intraday bias remains on the upside. Corrective rebound from 1.3538 should now target 1.4014 cluster resistance (38.2% retracement of 1.4791 to 1.3538 at 1.4017). Strong resistance should be seen there to complete the corrective bounce. On the downside, below 1.3872 minor support will turn intraday bias neutral again first.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.

Daily Pivots: (S1) 0.6412; (P) 0.6424; (R1) 0.6434; More...

Intraday bias in AUD/USD remains on the downside at this point. Firm break of 0.6418 support will resume the whole corrective fall form 0.6624. Next target is 38.2% retracement of 0.5913 to 0.6624 at 0.6352. On the upside, above 0.6456 minor resistance will turn intraday bias neutral again first.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, even in case of another fall through 0.5913, downside should be contained above 0.5506 (2020 low).