MONTHLY OUTLOOK

USDINR Fundamental

The USDINR pair trended significantly higher through August 2025, with the rupee depreciating to fresh record lows amid persistent external and domestic pressures. The pair ended the month at 88.1950, marking a monthly rupee decline of 0.68%. This movement was fueled by sustained FPI outflows, renewed trade tensions between India and the US—including tariff escalations—and strong month-end demand for dollars from importers. Adding to the headwinds were weak domestic equity markets and a widening trade deficit, amplified by increased gold imports and subdued merchandise export growth.

Throughout the month, the Reserve Bank of India appeared to pare back interventions, letting the rupee adjust to shifting macro conditions while deploying targeted stabilization measures like FX swap windows and export conversion rules. Despite India’s robust 7.8% Q1 GDP expansion driven by manufacturing and services, capital account flows and dollar strength dominated currency market sentiment. Trade tensions intensified as the US increased tariffs on Indian goods from 25% to 50%, while also imposing higher duties on Russian oil imports. Looking ahead, the rupee remains vulnerable to further depreciation due to lingering trade frictions and pressure from portfolio outflows; investors will watch for evolving trade negotiations, India’s PMI along with US labour data releases and Federal Reserve's interest rate decisions for direction.

USDINR Technical

A new all-time high level for the USDINR pair as it touched a high of 88.31 on Friday, surpassing the previous peak of 87.9575 recorded on 10th February 2025. The surge was driven by concerns that US tariffs could hamper India’s economic growth and put additional pressure on the balance of payments, further weakening already fragile portfolio inflows. The rupee ended the session at 88.1950 per USD, down 0.68% for August, largely due to Friday’s decline, marking the fourth consecutive month of losses.

From a technical perspective, the daily chart indicates a bullish trend as USDINR has broken and closed above the previous high of 87.9575 (yellow line), signalling further upside potential. The 14-day Relative Strength Index (RSI) has climbed to 68.35, indicating strong bullish momentum and approaching the overbought zone. Additionally, the pair continues to trade above the 21-day Exponential Moving Average (EMA)(Blue line) at 87.38, reinforcing the positive technical bias.

The rupee remains under pressure, falling to record lows amid worries over the impact of US tariffs on India’s future growth. Exporters may consider selling at current levels to as selling at all-time highs will guarantee business wise profitability, but aggressive selling is not advised as the pair could extend gains toward 89.00–89.50. Importers, on the other hand, should remain cautious, as hedging opportunities were limited for them in the past and is likely to remain the same as future outlook remain of rupee depreciation. Active buying at significant dips is recommended, and the use of plain options is highly suggested to manage risk during these volatile conditions.

EURUSD Fundamental

The EURUSD pair reflecting a blend of political and economic influences from both sides of the Atlantic. The pair opened at 1.1412 and closed at 1.1684, marking a 2.39% weekly gain. Early optimism for a potential Federal Reserve rate cut, reinforced by dovish remarks from U.S. officials and signs of labor market softness, provided support to the euro. Hopes for progress on a Ukraine–Russia peace deal further lifted sentiment. However, stronger U.S. economic indicators, including robust inflation and durable goods data, at times strengthened the dollar, limiting euro gains. Meanwhile, the Eurozone faced challenges from weak consumer confidence, political uncertainty in France, and tariff-related tensions with the U.S., though solid retail sales and German inflation offered temporary relief. Added to this was renewed risk from Washington, with tariff threats on semiconductors raising concerns about inflationary pressures. Overall, the pair remained highly sensitive to shifting geopolitical headlines and macroeconomic releases, with the Attention is shifting toward the upcoming policy meetings of the Fed and ECB scheduled for next month.

EURUSD Technical

The EURUSD pair recovered most of its losses from the previous month as it gained by almost 2.4% this  month. The pair gained continuously for three weeks, but failed to sustain the uptrend in the last week, as it succumbed to the selling pressure. The pair ended the month lower at 1.1684, after touching a monthly high of 1.1742. The formation of a symmetrical triangle can be seen on the daily chartframe, with a downward trendline connecting the July and August peaks acting as immediate resistance (white line). The broader uptrend remains intact, supported by the upward moving trendline(blue line).The symmetrical triangle(white lines) signals indecision, with potential for a breakout in either direction A sustained move above the upper boundary would open the way toward 1.1830 (July peak resistance), whereas a break below the ascending support trendline could shift bias to the downside, exposing the 100-day EMA at 1.1459 as the next key support. From a hedging standpoint, exporters may consider initiating hedges above 1.1700, while importers are advised to wait for dips toward the 1.1550 support zone.

GBPUSD Fundamental

The British pound gained in August, after declining for 4% in previous month. The BoE cut its benchmark interest rate by 25 basis points to 4.00%, marking a cautious move toward easing monetary policy amid easing inflation pressures. This decision came after a narrow 5-4 vote in the MPC, reflecting differing views on the pace of rate cuts. The Bank highlighted persistent inflation risks but emphasized the need for a gradual approach to avoid cutting rates too quickly. Inflation data of the UK showed CPI rising 3.8% in July, slightly above expectations, while labor market conditions showed some signs of easing. The rate cut supported the pound initially, though markets remain cautious given ongoing economic uncertainties. Market participants expect another possible rate cut in November, but the Bank remains vigilant on inflation and economic growth trends before making further moves. This cautious stance reflects the balancing act between controlling inflation and supporting a slowing economy. From the US, Q2 GDP growth came in at a robust 2.1% annualized rate, buoying the US dollar. For now, the divergence between central banks continues to support the pound, but domestic challenges such as economic growth and the labor market will play a key role in shaping its future outlook.

GBPUSD Technical

The GBPUSD pair recovered by over 2% this month, reaching a high of 1.3594 after steep losses in the previous month, though it ultimately closed lower at 1.3503, signaling fading bullish momentum. On the weekly chart, strong resistance is evident at the 1.3600 level, capping further upside, while the MACD indicator reflects a bearish crossover with the line trending downward, indicating a potential shift toward a downtrend. On the downside, initial support lies at 1.3390, and a decisive break below this level could expose the pair to the 50-week EMA at 1.3129, which is expected to act as the next significant support. From a hedging perspective, exporters are advised to utilize rallies toward the 1.3600 resistance to initiate fresh hedges, whereas importers should monitor the 1.3390 support zone closely and secure near-term obligations accordingly.

USDJPY Fundamental

Throughout the month, the USDJPY pair exhibited notable volatility amid diverging US and Japanese economic signals, resulting in a net downward trajectory from approximately 150.71 to a close near 147.06. The U.S. economy showed resilience with strong GDP and inflation data, limiting the case for rate cuts, though later in the month, dovish signals from the Fed - especially Powell’s Jackson Hole comments—put the dollar under pressure. On the Japanese side, the BoJ kept rates low but raised its 2025 inflation forecast, fueling speculation of a rate hike later this year. Positive domestic data and persistent inflation above the 2% target supported the yen. Political uncertainties in Japan and cautious BOJ messaging, however, capped yen strength. Looking ahead to September, the US dollar is likely to stay volatile and might lose some ground against the Japanese yen, based on recent economic trends. If US rate cuts materialize and BoJ hikes gain traction. US inflation reports and post-Jackson Hole Fed tone will be pivotal along with strong data could limit cuts. Japanese GDP data may reinforce BoJ caution, but persistent inflation could strengthen yen. Overall, bearish bias prevails amid policy divergence. Risks include trade war fears under potential Trump policies, favouring yen safe-haven flows. Overall, the difference in how the two countries handle monetary policy points to a slight weakening of the dollar versus the yen by month's end.

USDJPY Technical

USDJPY opened the month above 150 but quickly retreated, hitting a monthly low of 146.21 by mid-month. For most of the month, the pair remained confined within the 146–148 range, with the sharp move from 150 to 147 occurring on the first trading day. The yen’s strength was primarily fueled by a softer U.S. dollar, as markets speculated over the timing of potential Fed rate cuts. Throughout the period, the pair consistently found demand around the 147.00 level, which coincides with the 50-day EMA and has served as a key support. A brief dip below this zone late in the month raised risks of a deeper test toward 146.00 (S1) and 145.00 (S2), both important historical supports. On the upside, USDJPY reclaimed the 147–148 band, though a sustained move toward 150–151 looks less likely amid dovish Fed commentary. Moving averages continue to reflect an intact uptrend, and consolidation within 146–148 may provide the base for renewed upside momentum.