EUR/USD Technical Analysis: Bearish Trend Persists Amid Geopolitics

EUR/USD Market Overview

The EUR/USD pair continues to trade within a bearish impulse that originated on April 17. Despite attempts by buyers to recover ground over the past three weeks, gains remain capped, and the pair remains largely range-bound as market participants await clearer signals from the Federal Reserve and ongoing geopolitical developments.

Fundamental Drivers and Inflation Data

Would you like to read more good news about EUR/USD, Smart, and Money?

Recent US inflation data showing a decline to 3.5% year-on-year, against expectations of 3.8%, has tempered expectations for aggressive Federal Reserve monetary tightening. While Fed President Kevin Warsh maintains a cautious stance on inflation, his recent testimony lacked the hawkish surprises markets anticipated, resulting in minimal volatility for the US dollar.

Protect profits effectively with the smart Trailing Stop Expert Advisor. See it in action.

Labor Market and Geopolitical Factors

Weakness in the US labor market persists, with job creation falling approximately 100,000 below market expectations over the last three months. Concurrently, geopolitical tensions have resurfaced in the Middle East following the revocation of Iranian export authorizations and renewed disruptions at the Strait of Hormuz, though initial market reaction has been muted.

Technical Outlook

The technical structure remains bearish, with the initial impulse from April 17 still intact and the associated Bearish Imbalance 17 currently unfilled. Recent price action has seen liquidity taken below the August 1 low and above the July 2 high, suggesting bears may seek to leverage these levels for further downside momentum.

Trading Strategy and Conclusion

While the long-term structural outlook retains potential for a bullish reversal, the absence of confirmed technical patterns makes aggressive long positions currently inadvisable. Traders should prioritize waiting for clear, actionable bullish signals or monitor for potential sell entries within the Bearish Imbalance 17 structure as the market remains in a corrective phase.

Thank you for reading. Level up your trading with proven RobotFX expert advisors – check them out now.