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The EUR/USD pair reversed in favor of the euro and began a new upward movement, although without testing the nearest bullish pattern. As of Thursday, market confidence continues to grow that an agreement between Iran and the United States could be reached in the near future. Donald Trump continues to repeat this message, while no denials have come from Iran. Thus, Trump's statements are at least indirectly confirmed. Against the backdrop of rising optimism, bulls launched another advance, although still a very cautious one.
Traders understand that the issues being discussed between the United States and Iran are extremely complex, and the two sides may ultimately fail to reach a common agreement. Therefore, market participants are not rushing to buy the euro and sell the safe-haven U.S. dollar. Nevertheless, the technical picture still clearly points to bullish dominance. As a result, even without a corresponding signal, the euro may continue to rise, as I have repeatedly stated over the past several months.
Under the current circumstances, traders are left waiting either for a reaction from imbalance 13 or for the formation of new bullish patterns. I still consider the trend bullish. Last week, bulls came very close to testing imbalance 13 and receiving a new buy signal. Notably, there are currently no bearish patterns at all, so there is no reasonable basis for selling the pair, even hypothetically.
The previous buy signal from imbalance 12 worked perfectly, with the euro gaining approximately 270 points. Now the market needs fresh signals and a new wave of growth.
I must once again point out that the entire rally in the U.S. dollar during January–March was driven solely by geopolitics. As soon as the United States and Iran agreed to a ceasefire, bears immediately retreated, and for more than a month bulls have held the advantage. At the moment, the truce remains fragile, but negotiations continue and the possibility of peace still exists.
I have repeatedly said that I do not believe the bullish trend has ended, despite the break below important trend-forming lows and despite the war involving Iran. The market often prices in the most pessimistic scenario immediately, attempting to anticipate the most radical outcome. Therefore, I allow for the possibility that traders have already fully priced in the geopolitical conflict in the Middle East. If that is the case, bears may retreat for a long time.
The overall technical picture is currently very clear. The bullish advance remains intact, but it requires additional support. This week, support may come from U.S. labor market and unemployment reports, as well as geopolitical developments. The week began with renewed missile strikes in the Middle East, but by Tuesday it became clear that a full-scale escalation had not occurred.
The economic background on Thursday was once again almost nonexistent. Tomorrow, important U.S. labor market and unemployment reports will be released, and the market eagerly awaits these data every month. The Federal Open Market Committee's outlook and assessments of the overall condition of the U.S. economy still depend heavily on these figures. In addition, by the end of the week, Donald Trump may provide new information regarding the progress of negotiations. The U.S. president has a habit of surprising markets right before the weekend.
Bulls still have many reasons to remain active in 2026, and the conflict in the Middle East has not reduced them. Structurally and globally, Trump's policies — which caused a significant decline in the dollar last year — have not changed. In the coming months, the U.S. dollar may occasionally strengthen due to investor flight to safety, but this factor requires constant escalation in the Middle East conflict. I still do not believe in a sustained bearish trend for the euro. The dollar has received temporary support from the market, but what long-term factors can truly sustain bearish pressure on the euro?
The economic calendar for May 8 contains six events, and all U.S. releases are important. Therefore, the impact of the news background on market sentiment may be significant during the second half of Friday.
In my opinion, the pair remains in the process of forming a bullish trend. The news background changed sharply three months ago, but the trend itself cannot yet be considered canceled or completed. Therefore, bulls may continue their advance in the near future, provided geopolitics does not suddenly shift toward a new escalation.
Traders had an opportunity to open long positions based on the signal from imbalance 12, and the upward movement may continue toward this year's highs. In addition, imbalance 13 has formed and may generate a new bullish signal in the near future.
For the euro to continue rising without major obstacles, the conflict in the Middle East must move toward a stable peace agreement, and some signs of de-escalation are beginning to appear. Bullish traders still lack sufficient support for a new strong impulse, but they may receive it soon.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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