12.10.202617:51 Forex Analysis & Reviews: EUR/USD – Smart Money Analysis: The Week Begins with Another Decline

The EUR/USD pair has been declining for 23 consecutive days, apart from a few brief pauses. During this period, the euro has lost 470 points, and its losing streak began more than a month ago as the market prepared for an FOMC rate hike. Since then, the market has continued buying the US dollar, using any plausible pretext to do so. In trading terminology, such movements are known as "order flow." Typically, large market participants build up a pool of orders (a range) over a period of time, after which those orders begin to be executed. At that point, the prevailing news environment becomes largely irrelevant: the orders have already been placed and are now being filled.

For example, last week there were virtually no reasons to sell EUR/USD, apart from the routine issue of France's budget crisis. Nevertheless, the euro continued to decline. The new week had barely begun when the bears resumed their attacks, even though no significant news had reached the market yet. Traders are currently focused on the possibility of a ceasefire between Ukraine and Russia, the chances of which are about as high as those of a ceasefire between the United States and Iran. Nevertheless, Donald Trump talks about a ceasefire, the media eagerly picks up the idea, and everyone seems satisfied. However, it is unlikely that we can conclude that the dollar is rising again because of easing geopolitical tensions in Ukraine.

So far, nothing has been able to stop the euro's decline. Neither the ECB's tighter policy nor favorable economic data from the European Union, disappointing US labor market data, the chart pattern, or bullish patterns have made a difference. Since Imbalance 19 has been invalidated, the euro now has every chance of falling below the psychological level of $1.10. Meanwhile, Bullish Imbalance 19 has turned into a bearish inverted imbalance, generating a sell signal. The bulls failed to capitalize on two bullish swings and were unable to take advantage of the disappointing US labor market data. The bears did not even need to see Imbalance 24 play out before resuming their advance.

In September, the FOMC not only raised interest rates but also signaled its willingness to continue tightening policy. That was enough to sustain the bears' large-scale advance. Even after the Fed tightened monetary policy in September, with further tightening possible in October or December, I do not believe that the euro lacked a single piece of positive news during this period.

Overall, in my view, the news environment continues to favor the bulls. Despite the Fed's more hawkish monetary policy stance, this is not the only factor determining exchange rates. I would remind readers that US Treasury yields are reaching record highs, placing enormous pressure on the federal budget; the US economy has slowed in recent quarters; the labor market has disappointed more often than it has impressed; Donald Trump resumed a series of trade and non-trade disputes with many countries around the world in 2026; and the US stock market remains a source of serious concern because of uncontrolled, debt-financed investment in technology companies involved in AI development. The European Union also has its problems, but that is precisely the point: problems exist everywhere, yet only the euro is falling.

The current chart structure points to the continuation of bearish momentum, with no clear alternative in sight. The only relevant pattern at present is Imbalance 24, which is unlikely to play out because the bears do not even need a pause. Therefore, no sell signal has formed from this pattern, and one is unlikely to emerge in the near future. The bulls' only remaining opportunity is a liquidity sweep of the 1.1066 low. However, the chances of this happening are extremely low.

There was virtually no economic news on Monday, just as there had been during almost the entire previous week. Nevertheless, this has not stopped the bears from opening new short positions. The decline continues even without support from the news flow.

The bulls still have numerous reasons to launch an attack in 2026. Structurally and globally, Trump's policies—which led to a substantial decline in the dollar last year—have not changed. At present, I see no significant factors supporting the US currency, despite the FOMC's hawkish stance. Geopolitical developments, which supported demand for the US dollar during much of the first half of 2026, are no longer doing so.

Economic Calendar for the United States and the European Union

• Germany: Consumer Price Index (06:00 UTC).
• United States: Existing Home Sales (14:00 UTC).

On October 13, the economic calendar contains two entries, neither of which is particularly significant. Economic news is therefore unlikely to influence market sentiment on Tuesday.

EUR/USD Forecast and Trading Advice

In my view, the pair remains in the process of forming a bullish trend that has taken a year-long corrective pause. The news environment shifted sharply in favor of the bears seven months ago, but the trend itself, which has been in place for four years, cannot yet be considered invalidated or over. The bulls may resume their advance before the end of the year, but their only tangible opportunity at present is the 1.1066 low established in June last year.

The bears received a new sell signal from Imbalance 19. At this point, the only course of action for those already holding short positions is to keep them open. The bears are so confident in their position that they did not even need price to rebalance within Imbalance 24. The bulls can only hope for a miracle.