EUR/USD Technical Analysis: Bearish Impulse Persists Amid Data Void

Market Overview and Fundamental Context

The EUR/USD pair continues to trade within a local bearish impulse, despite a modest recovery attempt by the bulls over the past ten days. Recent commentary from Kevin Warsh at the Portugal international economic forum highlighted the necessity of lower inflation but provided no clarity on whether the Federal Reserve intends to achieve this through further monetary tightening. Consequently, market focus remains centered on upcoming inflation data to determine the Fed’s future policy path.

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Labor market data has introduced new uncertainty, as job creation figures have fallen approximately 100,000 below market expectations over the last three months. This cooling labor market suggests that the FOMC may need to adopt a more cautious approach regarding further interest rate hikes. Investors are now assessing whether the market’s current expectations for tighter monetary policy remain fundamentally supported.

Technical Structure and Price Action

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From a technical perspective, the bearish impulse initiated on April 17 remains active. Recent bullish price action successfully invalidated the bearish Imbalance 18; however, Imbalance 17 remains intact as a key technical reference point. The market currently lacks confirmed bullish patterns, and no immediate technical signal suggests a reversal of the ongoing downtrend.

Trading volume has been notably thin, with Tuesday’s session characterized by minimal price movement following the release of industrial production and ADP Employment reports. Liquidity was previously swept below the August 1, 2025, low, providing a potential floor for the bulls. This remains the primary technical argument for a possible stabilization, though it is not yet sufficient to trigger a long-term entry signal.

Geopolitical and Long-term Outlook

Geopolitical developments, particularly regarding the Strait of Hormuz and ongoing nuclear agreements, have not yet provided the expected relief to the U.S. dollar. Despite signs of easing tensions, the dollar has maintained its strength against the euro. This suggests that the current bearish pressure on EUR/USD is driven more by market positioning than immediate geopolitical shifts.

Looking ahead, the long-term structural outlook remains a subject of debate. Despite the hawkish stance of the FOMC, fundamental support for a sustained U.S. dollar rally appears limited given the prevailing economic policies. As the pair nears significant swing points, the market may see further liquidity sweeps, which could eventually signal the exhaustion of the current bearish trend.

Trading Strategy and Forecast

The current market environment does not offer a compelling technical basis for opening new long positions. Traders should wait for the development of clear bullish patterns or for price action to demonstrate a definitive reaction to the levels surrounding Imbalance 17. The upcoming FOMC minutes are unlikely to act as a significant catalyst, as the market currently anticipates minimal impact from the event.

In summary, the near-term bias remains neutral to bearish, awaiting technical confirmation before initiating any directional positions. Traders are advised to monitor liquidity clusters and potential sell signals emerging within the Imbalance 17 zone, as the pair remains in a consolidation phase without a clear catalyst for a breakout.

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