03.02.202618:29 Analisis Forex & Kajian: EUR/USD. Smart Money. Current Outlook for Bullish Traders

The EUR/USD pair reversed in favor of the U.S. dollar and returned to the bullish imbalance 12, which acts as support for the bullish trend and is the only area of interest for new buy positions. A similar imbalance is present in the GBP/USD pair, and it was also worked off this week. Thus, already today or tomorrow a new bullish signal for traders may be formed. I would like to remind you that the bullish trend remains in place, which means that any buy signal is not just a signal—it is a trend signal.

I would also like to note that the current decline in the pair looks somewhat unjustified from a fundamental news perspective; however, the price reacted to the weekly bearish imbalance that I had been indicating as a target for a long time. Thus, the decline in quotes over the past few days can be explained by technical analysis. There has been little news so far this week, and the only important report—the U.S. ISM business activity index—triggered a natural reaction from the bears. Nevertheless, the overall news background remains negative for the dollar.

The technical picture continues to signal bullish dominance. The bullish trend remains intact. A bullish signal was formed at imbalance 11, and a little later a new imbalance 12 appeared. Now traders should expect either a new buy signal from imbalance 12 or the invalidation of this pattern. Thus, the pair is currently at a kind of crossroads: either the trend will logically continue, or it will be put on pause.

There was no significant news background on Tuesday, but it is important to understand what may support either of the two scenarios described above. By the end of the week, meetings of the Bank of England and the ECB will take place, EU inflation data will be released—and then, unexpectedly, that's it. Just on Monday, the economic calendars included Nonfarm Payrolls, the unemployment rate, and several other important U.S. reports. However, another "shutdown" has begun in the United States, so at the moment the publication of this data is in serious doubt. Tomorrow, attention should be paid to EU inflation, as further deceleration could weaken the position of the European currency, increasing the likelihood of ECB monetary policy easing—not in February, but in the future.

The bulls have had more than enough reasons for a new offensive for the past 6–7 months, and with each new day their number only increases. These include the dovish (in any case) outlook for FOMC monetary policy, Donald Trump's overall policy (which has not changed recently), the U.S.–China confrontation (where only a temporary truce has been reached), protests by the American people against Trump under the "No Kings" banner, weakness in the labor market, bleak prospects for the U.S. economy (recession), the autumn shutdown (which lasted a month and a half), and the new shutdown that began in February. Also included are U.S. military aggression toward certain states, criminal prosecution of Powell, the "Greenland confusion," and escalating tensions with Canada and South Korea. Thus, further growth of the pair, in my view, will be entirely logical.

I still do not believe in a bearish trend. The news background remains extremely difficult to interpret in favor of the dollar, which is why I do not even attempt to do so. The blue line marks the price level below which the bullish trend could be considered over. Bears would need to push the price down by about 400 points to reach it, and I consider this task unachievable under the current news background and circumstances. The nearest upward target for the European currency was the bearish imbalance at 1.1976–1.2092 on the weekly chart, which was formed back in June 2021. This pattern was completely filled last week. Above that, only two levels can be highlighted—1.2348 and 1.2564. These levels represent two peaks on the monthly chart, from which the price could potentially take liquidity.

News Calendar for the U.S. and the European Union:

• European Union – Germany Services PMI (08:55 UTC)
• European Union – Services PMI (09:00 UTC)
• European Union – Consumer Price Index (10:00 UTC)
• United States – ADP Employment Change (13:15 UTC)
• United States – ISM Services PMI (15:00 UTC)

On February 4, the economic calendar contains five events, three of which (the latter ones) can be considered important. The impact of the news background on market sentiment on Wednesday may appear in the second half of the day.

EUR/USD Forecast and Trading Advice:

In my view, the pair remains in the stage of forming a bullish trend. Despite the fact that the news background remains on the bulls' side, bears have carried out regular attacks in recent months. Nevertheless, I see no realistic reasons for the start of a bearish trend.

From imbalances 1, 2, 4, 5, 3, 8, and 9, traders had opportunities to buy the euro. In all cases, we saw a certain rise, and the bullish trend has been preserved. Last week, a new bullish signal was formed from imbalance 11, which once again allowed traders to open buy positions with a target of 1.1976. That target was reached. Later, another bullish imbalance 12 was formed, and this week traders may receive a new opportunity to buy.