EUR/USD Analysis: Bearish Momentum Persists Ahead of FOMC Decision

The EUR/USD pair remains locked in a local bearish impulse that initiated on April 17, with bullish efforts limited to temporary consolidation over the past month. Recent liquidity sweeps suggest the broader downward pressure is resuming. Sellers continue to target the key swing low at 1.1325, where a potential liquidity sweep could provide bulls an opportunity to re-establish control.

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Fundamental drivers remain mixed despite persistent selling pressure. While the European Central Bank recently left monetary policy unchanged, the Federal Reserve is similarly expected to hold interest rates steady. Weak US labor market data and moderating inflation raise doubts regarding aggressive Fed tightening, contributing to erratic price action as markets weigh conflicting economic signals.

Geopolitical tensions in the Middle East, including reinstated US sanctions on Iranian oil and shipping disruptions in the Strait of Hormuz, have largely moved into the background. Market reactions to these developments remain subdued, indicating that geopolitical risks alone are insufficient to sustain a prolonged bearish trend. Nevertheless, the elevated risk backdrop has provided sellers with temporary justification to maintain pressure.

From a market structure perspective, technical indicators favor a continued bearish bias. Bearish Imbalance 17 remains unfilled, whereas Imbalance 18 was invalidated following soft US economic data. The recent liquidity sweep below key historical lows, followed by an upside sweep above the July 2 high, leaves sellers in control despite a lack of fresh bullish continuation patterns.

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Economic Calendar Highlights

Market attention is centered on the upcoming Federal Open Market Committee (FOMC) interest rate decision and subsequent press conference. With recent economic releases generating limited volatility, traders anticipate that the central bank's policy statement and forward guidance could serve as the primary catalyst for short-term price direction.

EUR/USD Outlook and Trading Analysis

While the long-term structural outlook retains potential for a broader bullish recovery, current market conditions dictate caution for buyers. Long positions remain high-risk without clear technical reversal confirmation or supportive market structure. Until bullish patterns emerge on higher timeframes, market dynamics continue to favor short-term downside risks toward key lower support levels.

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