EUR/USD Technical Analysis: Assessing Current Bearish Impulses

Market Overview and Recent Price Action

The EUR/USD pair has experienced a significant retracement, declining by approximately 280 points over the last two weeks. Despite the lack of escalating geopolitical conflict in the Middle East and the signing of a temporary ceasefire agreement between Tehran and Washington, the U.S. dollar has maintained strong momentum.

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While the Federal Reserve maintained a hawkish stance during its June meeting, market participants remain divided on whether the recent dollar strength is justified by fundamental developments. Conversely, the European Central Bank's monetary policy trajectory has not provided enough dovish signals to explain the depth of the euro's decline, suggesting potential exhaustion in the bearish trend.

Technical Structure and Bearish Imbalances

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From a technical perspective, the bearish impulse that began on April 17 remains active. The market is currently tracking two specific bearish imbalances, labeled 17 and 18, which serve as key resistance levels for potential price reactions in the short term.

For a bullish reversal to manifest, the market must invalidate these bearish imbalances. Currently, the absence of a confirmed mitigation of these levels keeps the pair under selling pressure, as traders continue to monitor for definitive sell signals before considering long-term entry points.

Fundamental Context and Economic Data

Recent U.S. consumer sentiment data showed a slight decline in June compared to market expectations, though it remains improved on a year-over-year basis. This data failed to halt the dollar's appreciation, reinforcing the notion that technical sentiment is currently overriding macroeconomic indicators.

Looking ahead, the broader structural trend remains influenced by long-term fiscal policy directions. While the U.S. dollar has strengthened, the lack of substantial supportive factors beyond current monetary rhetoric keeps analysts cautious regarding the sustainability of this rally.

Trading Outlook

The EUR/USD pair is nearing critical liquidity zones and historical swing points. These areas are vital to observe, as they often serve as catalysts for a reversal of an existing bearish impulse. Entering long positions at this stage is considered premature without clear technical confirmation.

Traders should remain patient, waiting for the bearish momentum to conclude or for established bullish reversal patterns to form. The economic calendar remains relatively thin, with attention shifting to comments from ECB President Christine Lagarde, which may provide further clarity on the euro's direction.

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