Over the past several days, EUR/USD has repeatedly attempted to reverse in favor of the euro and resume its upward movement in line with the prevailing bullish trend, but without success. For the last ten days, the euro has remained within Imbalance 13 (the 1.1604–1.1649 level). Bears have failed to invalidate this bullish pattern, meaning that despite the euro's decline over the past month and a half, the bullish trend remains intact.
Therefore, I am still waiting for a new buy signal to form within Imbalance 13. However, the euro's near-term outlook will depend less on technical analysis and trading signals than on geopolitics, which now appears to change almost daily. Traders have grown tired of these constant shifts. As a result, over the past two weeks, the market has shown little reaction to either Trump's statements or news coming from the Middle East.
Throughout last week and the beginning of this week, multiple reports suggested that an agreement between Iran and the United States was close to being reached. However, on Tuesday, the United States launched new strikes against southern Iran, and on Thursday, Iran and the United States exchanged attacks. Under these circumstances, a ceasefire between Washington and Tehran appears difficult to envision at the moment.
Nevertheless, the market has not yet abandoned expectations for negotiations and a potential agreement. Otherwise, the U.S. dollar would have continued to strengthen. It should be acknowledged that despite the recurring military actions by both sides, negotiations officially remain ongoing. Despite Donald Trump's new threats, Iran has not withdrawn from diplomatic contacts. Therefore, the possibility of peace remains. The only question is how long the market is willing to wait.
Under the current circumstances, traders are left waiting either for another reaction from Imbalance 13—which remains the last bullish pattern within the current bullish impulse—or for its invalidation. If the recent decline is viewed as a corrective pullback, it could very well conclude within Imbalance 13. However, without geopolitical support, bulls will find it difficult to launch a new advance.
If the current move is instead interpreted as the beginning of a new bearish trend, traders should expect negotiations to fail, the conflict to intensify again, and a signal to emerge within Imbalance 15. In my view, the first scenario remains more likely.
I must once again emphasize that the U.S. dollar's rally between January and March was driven entirely by geopolitical developments. As soon as the United States and Iran agreed to a ceasefire, bears immediately retreated, and for more than a month bulls dominated the market.
At present, the chances of reaching a formal agreement are once again declining. The market remains highly skeptical of any reports suggesting that the conflict will end soon or that a deal between Iran and the United States is imminent. To be more precise, the agreement will probably be signed eventually. However, "eventually" is not the kind of timeline that supports an active rally in EUR/USD.
The overall technical picture remains straightforward. The bullish trend is still intact but urgently requires support. Ideally, that support would come from geopolitics, with Iran and the United States at least signing a framework agreement and then continuing discussions regarding Iran's nuclear program. Without a positive news backdrop, bulls will struggle to launch a new advance.
Friday's economic data offered little of interest to traders. Germany's unemployment report released in the morning showed a decline in the unemployment rate from 6.4% to 6.3%, while the inflation report published several hours later showed a slowdown from 2.9% to 2.6% in May. Neither report triggered any meaningful market reaction.
There remain numerous reasons for bulls to stay active in 2026, and the outbreak of conflict in the Middle East has not diminished them. Structurally and fundamentally, the policies pursued by Trump—which contributed to the dollar's substantial decline last year—have not changed.
Over the coming months, the U.S. dollar may occasionally strengthen amid risk-off flows, but this factor requires a continued escalation of tensions in the Middle East. I still do not believe in a sustained bearish trend for EUR/USD. The dollar has received temporary support from the market, but what will provide bears with sufficient momentum over the long term?
News Calendar for the United States and the Eurozone:
The economic calendar for June 1 contains three scheduled releases, with the ISM Manufacturing PMI standing out as the most important. The economic backdrop may influence market sentiment during the second half of Monday's trading session.
EUR/USD Forecast and Trading Recommendations:
In my view, the pair remains in the process of forming a bullish trend. The news backdrop changed dramatically three months ago, but the trend itself cannot yet be considered invalidated or completed. Therefore, bulls may resume their advance in the near term if they receive even modest support from geopolitical developments.
Traders previously had opportunities to open long positions based on the signal from Imbalance 12 and the signal generated by the Order Block. The upward movement may resume from Imbalance 13 and extend toward this year's highs.
At this stage, however, it is crucial for bulls to maintain control of the market. For the euro to continue advancing without significant obstacles, the conflict in the Middle East must move toward a lasting peace. A breakdown in negotiations, rejection of the framework agreement by either side, or another ceasefire violation could strengthen bearish pressure.
For now, bulls still lack sufficient support for a full-scale advance. The buying zone remains at 1.1605–1.1649.
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