Weekly Outlook | Stronger Dollar boosting risk- off sentiment
Updated Updated Tue, 2025 August 5 02:17
As expected, the Federal Reserve did not cut interest rates last week. The news caused the Dollar to resume more strength towards the end of last week. The ADP data came in stronger, further also the gross domestic product from the US had been higher than expected, which helped the Dollar to gear up strength until the NFP report caused a strong rebound against the Greenback on Friday. The early days in August might hence help currencies to gear up momentum against the Dollar.
The stronger Dollar causes the risk sentiment to fade, which can be seen with most equities falling. Crypto currencies currently follow suit by losing some steam as well.
Despite the interest rate decision from the UK this week is expected to be rather quiet in terms of data releases.
Important events this week:
– US- ISM Services PMI – The purchasing manager index from the services sector gives a good overview over the state of the economy. Despite being marked as soft indicator a stable trend might support the outlook in general.
NAS100 daily chart
The Nasdaq could be quite responsive to the data. It is expected at 51.5, which would be a rise compared to last month figure. A weaker reading might cause the current negative trend to gear up steam causing the index to move lower. Especially a break of the 50- moving average currently sitting at 22.367 might unleash fresh bearish momentum.
– UK- rate decision– The Bank of England is expected to cut interest rates down to 4.00% from the current 4.25%. Despite the move being currently expected the market might hence start to lose some steam. In particular the GBPUSD currency might show some bearish momentum as the uptrend has seemingly lost some momentum. The data will be released on Tuesday, August 05 at 16:00 CET.
GBPUSD monthly chart
The market might follow up with the bearish momentum, which caused the bullish trend to be interrupted. A rate cut might hence cause traders to be vigilant and furthermore offload GBP long positions. Especially a break of the important support zone at 1.3160 should be observed. On the flipside a stable rate might be used to enter into fresh USD positions cheaper at higher prices. The current bearish sentiment seems to rule markets in general in most currency pairs. The interest rate decision will be held on Thursday, August 07 at 13:00 CET.
