Weekly Forex Forecast : 20th 26th October 2025

Market Overview

The global foreign-exchange market is entering the week of 20-26 October with a cautiously optimistic tone, driven by a mix of modestly supportive risk appetite and a lingering undercurrent of caution around major central-bank policy signals and macro data. The US Dollar (USD) remains under pressure from softening expectations of near-term interest-rate cuts, while the Euro (EUR) and British Pound (GBP) are seeking stable footing amid economic growth uncertainties. Meanwhile the Japanese Yen (JPY) continues to trade within a bullish channel versus USD, suggesting underlying resilience in the USD/JPY pair for now. Overall, the market looks prepared for selective directional moves rather than a broad trend breakout, so traders should expect moderate volatility, key macro data surprises, and technical setups to drive the next leg of movement.

Previous Week Recap

Weekly Forex Forecast saw the USD broadly weaken as commentary from central-bank officials signalled a more cautious stance on further rate hikes. The GBP strengthened modestly against the USD, reaching around $1.3349 as the market reacted to the UK finance minister’s confirmation of planned tax increases and spending cuts, which bolstered sterling despite underlying UK growth concerns. The EUR/USD pair held up relatively well, buoyed by some Eurozone resilience, while USD/JPY recovered within a bullish channel, finishing near the 150.38 area. On the technical side, both EUR/USD and GBP/USD remain within corrective phases, with some upside albeit under threat of reversal if support breaks. 

Thus, the market enters the coming week with modest gains established, but with key data and event risks ahead that could challenge these levels.

Fundamental Outlook

Here is a schedule of upcoming macro-economic events and central-bank developments likely to influence major FX pairs in the week 20-26 October:

Note: The exact times for each release can be found in respective economic-calendars (local time).
As the week progresses, the primary fundamental focus will be:

• The reaction of the USD to US flash PMIs and unemployment/claims data on Thursday.
• The EUR reaction to Eurozone flash PMI data on Thursday.
• The GBP remains sensitive to UK growth/inflation data and commentary from the UK central bank (even if no formal meeting).
• The USD/JPY pair may react to global risk-sentiment shifts and Bank of Japan commentary, given the bullish channel structure.

Technical Analysis

Below is a summary of the technical outlook for key pairs.

Notes on the setup:

• For EUR/USD the price is positioned after a bullish correction near 1.1674 and moving averages support upside for now.
• For GBP/USD the price is forming a triangle near ~1.3410; if the price fails to break up it may resume decline.
• For USD/JPY there is expected a short corrective dip then a rebound to extend the uptrend; breakout above 153.65 would signal further upside.

Thus, the technical bias is cautiously positive for EUR/USD and USD/JPY, while GBP/USD is at a more precarious juncture with risk of reversal.

Weekly Forecast / Bias

• EUR/USD: The bias is neutral-to-mildly-bullish. Expect a continued push higher towards ~1.1825 early in the week, followed by a likely rebound/ pull-back phase. If the pair fails to break significantly above resistance, risks favour a decline toward the support zone of ~1.1645.
• GBP/USD: The bias is neutral, leaning slightly bullish for a test of ~1.3535, but a failure at that level could trigger a stronger drop toward ~1.3045-1.3155. Traders should monitor the triangle pattern breakout direction.
• USD/JPY: The bias is bullish, with a potential correction toward ~147.35 followed by a rebound toward ~159.35. However, if support breaks below ~145.25, the up-trend would be invalidated and downside toward ~142.35 would be on the cards.

Trading ranges to consider:

• EUR/USD: ~1.1645 → ~1.1825
• GBP/USD: ~1.3375 → ~1.3535, with risk to ~1.3155 if breaks down
• USD/JPY: ~147.35 → ~153.65, with upside possibility toward ~159.35

Key Levels Summary

Practical Trading Notes

• Headline risk: Keep an eye on surprise macro-data (e.g., flash PMIs, unemployment claims) that can trigger sharp FX moves.
• DXY correlation: The broad U.S. Dollar Index (DXY) remains a useful risk barometer. USD strength often pressures EUR/GBP and supports USD/JPY.
• Consensus insights: Markets appear to expect limited near-term Fed tightening, which keeps USD mildly pressured. Simultaneously, GBP bears some vulnerability due to UK growth & fiscal outlook concerns. On the other hand, JPY benefits if risk-sentiment deteriorates and safe-haven flows rise.
• Risk management: With technical levels clearly defined, use tight stop-losses around key support/resistance regions and avoid chasing breakouts without confirmation.
• Position sizing: Given moderate volatility and defined ranges, consider smaller position sizes and focus on risk-reward setups (e.g., 1:2 minimum).
• Time-of-day effects: Be cautious at key release times (Thursday data day) and avoid opening large directional positions just ahead of major news.
• Cross-pair spillovers: Moves in EUR/USD often coincide with USD/JPY and USD/CHF reactions; do not trade pairs in isolation without watching correlated flows.

Final Checklist

Before the week kicks off, ensure you have:

• Review and update your economic-calendar with exact release times (local time) for the week 20-26 October.
• Marked key technical levels (support & resistance) on your charts for EUR/USD, GBP/USD, USD/JPY and other pairs you trade.
• Define your risk-parameters and position-sizes in advance (stop-loss, take-profit, risk-per-trade).
• Set conditional orders or alerts around breakout/breakdown thresholds (e.g., EUR/USD above 1.1825 or below 1.1645).
• Ensured you are aware of major market-drivers (central-bank comments, PMIs, claims).
• Planned for sentiment shifts: e.g., risk-on rally boosting commodity-currencies, risk-off favouring JPY/CHF.
• Reviewed correlation matrix for your traded pairs to avoid unintended exposures (e.g., EUR/USD and USD/CHF both moving USD-side).
• Confirmed your trading platform is set up to handle high-volatility windows (during release times) and you have required margins/stop-losses in place.
• Defined post-trade review process: after the week ends, evaluate how your trades aligned with forecast, what worked/failed and update for the next week.