Weekly Forex Forecast :27- 31 October, 2025

Market Overview

Global currency markets remain dominated by the interplay of monetary-policy expectations, economic growth differentials and risk-sentiment swings. The U.S. dollar index (DXY) has recently shown signs of tentative recovery yet remains under pressure from structural headwinds. According to one dataset, the euro to U.S. dollar exchange rate (EUR/USD) was at 1.1641 on 20 October 2025, representing a 1.35 % monthly decline, yet still a 7.63 % gain over the prior 12-month period.

• The Federal Reserve (Fed) expected to resume or continue interest-rate cuts, which erodes dollar yield advantages.
• The European Central Bank (ECB) largely done with easing, which limits euro downside but also dampens upside momentum.
• Political uncertainty in major currency zones (France, Japan) and evolving trade risks contributing to safe-haven flows in both the U.S. dollar and Japanese yen.
• Technical exhaustion in previously strong trends, raising the prospect of sideways consolidation or pullbacks rather than sustained trending moves.

Thus, while the broad theme remains “dollar-down/major-currency-up” over the medium-term, markets are stepping cautiously given near-term risk-factors (data delays, geopolitics, central-bank signals). For the week ahead, the tone is one of tactical consolidation with selective directional bias rather than aggressive breakout expectation.

II. Previous Week’sRecap

Over the past week the major pairs illustrated the following key developments:

• EUR/USD experienced its worst Weekly Forex Forecast of 2025, falling more than 1.4 % as renewed U.S. dollar strength and French political strain weighed on the euro.
• Technical signals for EUR/USD also turned more bearish: after breaking below the 1.16 level, the pair opened the path toward 1.14 as key support. 
• Sentiment within FX markets showed increased caution. According to one commentary, the uptrend in EUR/USD (which had been impressive earlier in the year) met a two-wave top formation and now faces an active correction phase.
• From a fundamental-risk perspective, delayed U.S. economic data (due to a government shutdown) led to heightened volatility and uncertainty, reinforcing safe-haven flows into the dollar despite weaker data.
• Currency-predictor models show the EUR/USD expected near 1.1454 on 29 October, with a projected upper range around 1.2599 and lower around 1.0309.

In sum, last week’s price action confirmed that while the broader bullish narrative for major non-dollar currencies remains intact, the near-term environment is one of correction rather than continuation.

III. Fundamental Outlook

Below are the major macro-economic and central-bank events to watch for the week 27-31 October 2025. Local times refer to the domestic time zone of the event origin (typically New York for U.S., Frankfurt for euro-zone).

Monday 27 October

• No major headline event currently flagged that typically moves currency markets.

Tuesday 28 October

• Release of the U.S. monthly personal-consumption expenditures (PCE) inflation figures (core and headline).
• Governor speech from the Federal Reserve may also appear (time TBA).

Wednesday 29 October

• Euro-zone flash consumer-price-index (CPI) for October (headline & core) – typically around 09:00 CET.
• U.S. initial jobless claims data for the week (08:30 ET).
• Possible remarks from ECB Executive Board member(s) on policy outlook.

Thursday 30 October

• U.S. third-quarter GDP (advance estimate)  released around 08:30 ET.
• Euro-zone business-confidence (ZEW or other) survey time around 10:00 CET.

Friday 31 October

• U.S. monthly non-farm-productivity and unit-labour-costs data (08:30 ET).
• U.S. personal-income and personal-spending report (08:30 ET).
• Japan monthly industrial-production or trade-balance data (local time JST) which often influences JPY crosses.

These entries are drawn from economic-calendar disclosures across major currency-analysis platforms. Each event has potential to either amplify existing trends or act as a catalyst for reversal, depending on surprise magnitude.

IV. Technical Analysis

Notes on chart setup:

• For EUR/USD the breakdown of 1.16 was a key trigger; the move toward 1.14 remains plausible given current momentum.
• GBP/USD’s headline risk (UK tax/fiscal policy) means support levels could be challenged if sentiment turns.
• USD/JPY is responding to both dollar strength and safe-haven flows, so trend momentum remains intact until a clear catalyst reverses the pattern.

V. Weekly Forecast / Bias

Given the convergence of fundamental and technical factors, the following directional view applies for the week 27-31 October 2025:

• EUR/USD: The bias is moderately bearish in the short term, with expected trading range approximately 1.1450–1.1720. A break below 1.1450 opens the path toward 1.1400. Any bounce must clear 1.1670 to shift bias back toward medium-term bullish.
• GBP/USD: Slightly bearish to neutral. Trading expected in the range 1.2700–1.3120. Failure to hold ~1.2800 could see testing of ~1.2700. A clear move above ~1.3120 would improve the outlook.
• USD/JPY: Biased to the upside (i.e., dollar strength). Expected range 151.50–156.50. A sustained move above 155.00 could open toward 157.50+. Support near 152.00 is key.

Traders should remain alert to the timing of the major data releases listed above, as surprise outcomes can trigger sharp intraday moves. Given the recent up-move in the dollar and fading momentum in the euro, the path of least resistance for EUR/USD may be downward, unless clear positive surprises emerge for the euro-zone.

VI. Key Levels Summary

VII. Practical Trading Notes

• Headline risk remains elevated: The week includes major U.S. inflation, growth and employment data, plus euro-zone inflation and confidence surveys. Any big surprise could shift directional bias.
• DXY correlation: The U.S. dollar index remains a useful reference for overall USD strength/weakness. A strong DXY move up may correspond with dips in EUR/USD and GBP/USD. Conversely, if DXY weakens, expect relief rallies in the non-USD majors. Recent commentary suggests the dollar’s short-term rebound may lack staying power.
• Consensus insights: Many strategists remain dollar-bearish over the medium term, targeting EUR/USD nearer 1.20 or above. However, that does not preclude short-term dollar strength based on surprises or risk flows.
• Risk-management tip: Use tight stops during data releases and monitor implied volatility builds before major releases. Consider reducing size around times when macro surprises could trigger swift moves against the trend.
• Correlation caution: Correlations between currency pairs may shift quickly. For example, USD/JPY may behave differently from EUR/USD if yen has its own separate driver (e.g., Bank of Japan policy surprises).
• Technical-confirmation: Even if fundamental bias points one way, wait for technical confirmation (breaks of key support/resistance, sustained momentum) to improve probability of success. For instance, EUR/USD needs a clean break below 1.1450 to confirm the downside bias.
• Calendar awareness: Some data (especially in the U.S.) may still be subject to delay or revision due to government-shutdown effects. The market may overreact to data absence.

VIII. Final Checklist

Before the start of the next trading week (27-31 October 2025), traders should ensure the following:

• Review the economic-calendar entries above and mark out times (local) for major releases.
• Set alrts for key support/resistance levels listed in the ‘Key Levels Summary’ above.
• Confirm daily trends with a 200-day or 50-day moving average for each pair you trade.
• Evaluate implied volatility in options markets or futures to gauge whether large moves are being priced in (particularly ahead of U.S. inflation/GDP releases).
• Maintain disciplined risk-control: position size relative to account equity, stop-loss levels, and avoid over-leverage ahead of major macro events.
• Monitor news flows for geopolitical surprises (trade tensions, central bank commentary, political developments) which can trigger unanticipated moves.
• Ensure you have alternative trade scenarios. The primary bias may point one way, but build contingency plans for the scenario that the bias proves wrong (e.g., euro rally instead of dip).
• Check inter-market cues: commodity-prices, bond yields, equity-markets all feed into FX. For example, rising U.S. yields often support the U.S. dollar and weigh on EUR/USD.
• Ensure your trading plan is documented: entry criteria, exit criteria, risk/reward ratio, what would make you invalidate your view.
• Finally, remain emotionally detached. When trading major pairs with macro drivers, price can move rapidly in either direction. Patience and discipline matter more than conviction without confirmation.