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EUR/USD remains within the local bearish impulse that began on April 17. Last week, the pair reacted to Imbalance 17, but quickly returned to its previous range. A second reaction to Imbalance 17 cannot be ruled out. The sharp decline in the U.S. dollar last week was driven by the Federal Reserve meeting, as well as economic data from both the euro area and the United States.
It is worth recalling that last Wednesday, Kevin Warsh once again highlighted the problem of elevated inflation in the United States but was not sufficiently convincing in explaining the Federal Reserve's next policy steps. Traders expected Warsh to deliver either a clear indication of a September rate hike or, at the very least, more hawkish rhetoric that would answer the key question: Is the Federal Reserve prepared to tighten monetary policy this autumn? Instead, he referred to incoming economic data, and, as we know, the latest U.S. labor market figures were relatively weak. Consequently, in September, Warsh could argue that labor market conditions remain too weak to justify a rate hike.
On Thursday, the bulls received support from stronger-than-expected GDP data for both Germany and the euro area, alongside weaker U.S. GDP figures. On Friday, traders initially interpreted the inflation report as negative for the euro, but quickly reversed their view after concluding that the European Central Bank (ECB) is currently the only major central bank prepared to tighten monetary policy.
It should be remembered that expectations of Federal Reserve tightening are only expectations and may change in response to geopolitical developments or further comments from Kevin Warsh. Recent U.S. labor market data have been relatively weak, while the latest inflation report pointed to slower price growth. Together, slowing inflation and a weakening labor market raise doubts about whether the Federal Open Market Committee (FOMC) will raise interest rates in the foreseeable future. Personally, I am not convinced that the Federal Reserve will necessarily begin tightening policy this year, and if it does, it is unlikely to be a one-off move.
Geopolitical developments remain a secondary factor but continue to influence the global economy. Tehran and Washington are still unable to reach an agreement or even return to the negotiating table. President Donald Trump continues to claim that agreements on the Strait of Hormuz and Iran's nuclear program are close, but in reality, developments suggest the opposite. Tehran has repeatedly denied Trump's optimistic statements, indicating that no meaningful negotiations are currently taking place. As a result, a deal appears unlikely in the near term. The unresolved geopolitical conflict continues to support energy prices, which in turn keep inflation elevated across many economies. In my view, however, the mere continuation of the conflict between Iran and the United States is no longer enough to trigger another major bearish advance in the euro.
The current technical picture indicates that the bearish impulse that began on April 17 remains intact. Bearish Imbalance 17 has already been tested, but a valid sell signal may still emerge. The key question is how deep any decline in the euro could be and whether the downward move may have already concluded on Friday. Last week also saw the formation of a new Bullish Imbalance 19, giving buyers reason for optimism. Therefore, the euro may initially decline toward Imbalance 19, where a new buy signal could emerge, allowing the broader bullish trend to resume.
Monday's economic calendar was relatively light. German retail sales once again came in below market expectations but had little impact on trading activity. The U.S. ISM Manufacturing PMI produced an unexpected reading, yet it also had only a limited effect on overall market sentiment.
There are still numerous reasons for buyers to remain optimistic in 2026, and the conflict in the Middle East has done little to diminish them. From both a structural and long-term perspective, the policies introduced by President Trump—which contributed to the sharp decline in the U.S. dollar last year—have not fundamentally changed. At present, I do not see any strong long-term support factors for the U.S. dollar, despite the FOMC's hawkish stance. Nevertheless, sellers continue to control the market for now, while no confirmed bullish technical signals have yet emerged.
Economic Calendar for the United States and the Euro Area
United States
The economic calendar for August 4 contains only one event of moderate importance. As a result, the impact of macroeconomic data on market sentiment on Tuesday is likely to be limited or negligible.
EUR/USD Forecast and Trading Tips
In my view, the pair remains in the process of forming a broader bullish trend. Although the fundamental backdrop shifted sharply in favor of the bears five months ago, the long-term uptrend cannot yet be considered invalidated. Following two liquidity grabs below clearly defined swing lows, buyers may launch another advance. At the same time, a sell signal could still form within Imbalance 17, meaning the euro may decline this week toward Imbalance 19. Should a bullish signal emerge within Imbalance 19, traders may then consider opening long positions with targets above 1.1620.
*এখানে পোস্ট করা মার্কেট বিশ্লেষণ আপনার সচেতনতা বৃদ্ধির জন্য প্রদান করা হয়, ট্রেড করার নির্দেশনা প্রদানের জন্য প্রদান করা হয় না।
ইন্সটাফরেক্স বিশ্লেষণমূলক পর্যালোচনাগুলো আপনাকে মার্কেট প্রবণতা সম্পর্কে পুরোপুরি সচেতন করবে! ইন্সটাফরেক্সের একজন গ্রাহক হওয়ায়, দক্ষ ট্রেডিং এর জন্য আপনাকে অনেক সেবা বিনামূল্যে প্রদান করা হয়।
