The Global FX Outlook – August 2025

August brings a fresh shift in the FX landscape. Two blockbuster U S. trade deals—worth US $550 billion with Japan and US $600 billion with the EU—have eased tariff fears and revived growth optimism. At the same time, the Federal Reserve’s “higher-for-longer” stance has sparked a rebound in the U.S. dollar, while Europe’s surprisingly strong data keep the euro supported. Commodity currencies are stabilizing, and sterling is bracing for an early-August Bank of England rate decision.

The August2025 Currency Outlook unpacks the forces likely to steer exchange rates in the weeks ahead.

What you will learn in this report:  

• Market analysis: How the Fed’s “mildly restrictive” policy, record-size U S. trade deals, and Europe’s growth resurgence are reshaping currency trends.
• Currency projections: Updated one-month and three-month views for USD, EUR, GBP, CAD, JPY, CNY, AUD, NZD, and key emerging-market pairs.
• Risks to watch: U.S. stagflation surprises, renewed U S.–Mexico tariff frictions, China’s property-led slowdown, and widening policy divergence across major central banks.