EUR/USD Technical Analysis: Bearish Pressure Persists Amid Geopolitics

Market Overview and Geopolitical Context

The EUR/USD pair remains under downward pressure following a 190-point decline last week. While recent geopolitical tensions between the United States and Iran have eased following a 60-day ceasefire agreement and the commencement of nuclear negotiations in Switzerland, the U.S. dollar has retained its safe-haven appeal. Market participants remain cautious, opting to hold the dollar despite a reduction in immediate conflict risks.

Technical Structure and Current Trend

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From a technical perspective, the pair remains in a short-term bearish phase, though the broader long-term trend maintains a bullish bias. Bearish momentum persists despite a lack of consistent fundamental support for the U.S. dollar, largely influenced by the Federal Reserve's recent hawkish shift. Traders are currently monitoring bearish imbalance 17 as a reference point for potential short positions.

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Key Levels and Liquidity

The pair is approaching significant historical lows and swing points where liquidity is likely to be concentrated. A move below these levels could act as a catalyst for a reversal of the current bearish impulse. Until the market demonstrates a clear technical reversal—such as the invalidation of imbalance 17 or the formation of confirmed bullish patterns—opening long positions remains premature.

Economic Outlook

Tuesday's session will focus on critical Purchasing Managers' Index (PMI) data from both the Eurozone and the United States. Key releases include the German and Eurozone Manufacturing and Services PMIs at 07:30 and 08:00 UTC, followed by U.S. Manufacturing and Services PMIs at 13:45 UTC. These reports are expected to provide further clarity on economic momentum and may influence near-term price action.

Trading Strategy

The consensus suggests that the current bearish impulse is temporary within the context of a larger structural bullish trend. Investors are advised to wait for the completion of the present downward cycle and the emergence of structural bullish confirmations. Short-term traders should exercise caution, as current market movements appear decoupled from the broader fundamental landscape.

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