Errante’s The Week Ahead: 4^th – 8^th August 2025

Highlights of the Week

• US Services Sector in Focus: S&P Global Services PMI and ISM Non-Manufacturing PMI (Tuesday) are in the spotlight after July’s softer-than-expected payrolls. Dollar volatility remains high, and risk sentiment is fragile.
• BoE Rate Decision: Markets await Thursday’s Bank of England meeting amid signs of UK stagnation and global growth risks.
• Jobless Claims & US Bond Auctions: With the US labor market cooling, initial jobless claims and both 10- and 30-year auctions are crucial for yield direction and cross-asset flows.

Errante’s The Week Ahead: 4^th – 8^th August 2025

A sharply weaker US jobs report has recalibrated the market’s base case for the Fed, with September or October cuts now the dominant scenario.

The US dollar index (DXY) broke below support, and both stocks and Treasuries rallied on renewed easing bets. However, Trump’s announcement of new tariffs raises stagflation risk, challenging the soft-landing narrative and introducing geopolitical and trade-related volatility.

This is a week to stay data-dependent and tactical. Watch for a potential continuation of USD downside if services data and jobless claims deteriorate further. Equities and crypto markets will remain sensitive to Fed commentary and macro flows, while gold and Bitcoin could extend higher if risk-off sentiment or rate-cut expectations accelerate.

BoE Rate Decision and Latest UK Economic Data

The Bank of England’s upcoming rate decision finds the central bank at a crossroads. While headline inflation has finally returned to the BoE’s 2% target, core and services inflation remain uncomfortably high, driven by persistent wage growth and structural labor market tightness. Although the UK economy is stagnating—evidenced by near-zero GDP growth and waning retail sales—robust wage gains above 5% keep underlying price pressures sticky. Most analysts expect the BoE to keep its policy rate unchanged at 4.25%, but forward guidance will be closely watched: the Committee is likely to emphasize a cautious, data-dependent stance, making clear that further evidence of cooling in services inflation and pay growth is needed before signaling a rate cut.

For markets, the risk is asymmetric. Any dovish tilt or hint of imminent easing could put downward pressure on the pound and support gilt prices, especially as markets now price in two 25bp cuts by year-end. However, should the BoE strike a more hawkish tone—citing sticky inflation and wage risks—sterling may find support, particularly against lower-yielding peers. Ultimately, the path forward for rates will hinge on incoming wage and inflation data, and the BoE is likely to proceed with caution to avoid reigniting inflationary pressures or derailing a fragile recovery.

Opinion

In light of the latest US labor market data and heightened volatility driven by trade tensions and interest rate uncertainty, global markets are now in a fragile state. The unexpected slowdown in job creation has reinforced expectations that the Federal Reserve may begin cutting rates as early as this autumn. However, President Trump’s announcement of new tariffs has reintroduced stagflation risks, complicating market pricing and sentiment. As a result, the US dollar has partially lost its traditional safe-haven appeal, with its recent moves diverging from classic risk-off dynamics.

Ali Mortazavi, Analyst and Head of Education at Errante, comments: “In the week ahead, our focus will be on US services data and the Bank of England’s policy decision. Any further weakness in US services indicators or rising political uncertainty could put additional downward pressure on the dollar and major indices, while also creating opportunities for alternative assets such as gold, bitcoin, or even the pound, should the BoE strike a more hawkish tone. In this environment, traders need to remain tactical and prioritize robust risk management more than ever.”

Market Events and Announcements (GMT+3)

Monday, 4^th August 2025

• United Kingdom: Bank Holiday
• Canada: Civic Holiday

Tuesday, 5^th August 2025

• 16:45 – USD: S&P Global Services PMI (Jul) | Forecast: 55.2 | Previous: 52.9
• 17:00 – USD: ISM Non-Manufacturing PMI (Jul) | Previous: 50.8
• 17:00 – USD: ISM Non-Manufacturing Prices (Jul) | Previous: 67.5

Wednesday, 6^th August 2025

• 17:30 – USD: Crude Oil Inventories | Previous: 7.698M
• 20:00 – USD: 10-Year Note Auction | Previous: 4.36%

Thursday, 7^th August 2025

• 14:00 – GBP: BoE Interest Rate Decision (Aug) | Previous: 4.25%
• 15:30 – USD: Initial Jobless Claims | Previous: 218K
• 20:00 – USD: 30-Year Bond Auction | Previous: 4.89%

Friday, 8^th August 2025

• No high-impact event

Market Insights: Key Charts to Watch

US30 (Dow Jones Industrial Average Index) – Daily Chart

US30 has confirmed a bearish breakdown below its ascending trendline and the key 61.8% retracement at 44,281. Volatility has increased, and price is now consolidating near the neckline of a classic double-top pattern at around 43,740. The daily RSI sits at 43, suggesting weak momentum, while the stochastic oscillator is oversold but not yet reversing, which points to persistent downside risk.

A notable surge in selling volume has accompanied the latest drop, validating the bear move and indicating institutional risk reduction. This is not a capitulation spike, but the highest volume since the previous major correction, highlighting that sellers are firmly in control for now.

Main Scenario and Targets:

• The breakdown opens the path toward Fibonacci extension targets at 43,378, 42,900, and potentially 42,371.
• As long as price remains below the broken trendline (now resistance at 44,280–44,400), sellers are likely to test these levels, especially if macro headwinds persist.

Key Levels:

• Support: 43,377; 42,900; 42,372
• Resistance: 44,280; 45,135

Alternative Scenario:

A sharp rebound above 44,400—particularly on strong volume and bullish reversal candlesticks—would neutralize the bearish bias and set up a retest of the highs at 45,135. Otherwise, expect rallies to be sold into while risk sentiment remains fragile.

Bitcoin (BTC/USD) – Daily Chart

BTC continues to trade below its 61.8% retracement at 116,627 and below the critical $119,800–120,000 resistance zone. The trend is short-term bearish-to-neutral, with the RSI holding near 50 and stochastics trending in oversold territory.

Volume has surged on the most recent downswings, especially as BTC breached support near $117,000. This volume spike confirms distribution rather than accumulation, as ETF inflows have slowed and long-term holders are pausing large buys. The notable rise in red (down) volume bars increases the probability of further tests of lower support.

Main Scenario and Targets:

• If BTC fails to reclaim $116,627 soon, the path of least resistance is toward support at $114,626, $113,263, and possibly down to the $111,483–109,500 extension zone.
• Recovery attempts are likely to stall near $119,800–120,000 unless sentiment sharply improves.

Key Levels:

• Support: $116,627; $114,626; $113,263; $111,483
• Resistance: $119,806; $123,238

Alternative Scenario:

A rapid move back above $119,800 on strong green volume would mark a reversal, targeting a breakout above the all-time high at $123,238. Otherwise, bears are favored while volumes favor sellers and macro flows remain cautious.

Errante’s Weekly Newsletter brings you critical market insights to keep you ahead in the financial world. Stay informed and make strategic decisions with Errante.

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