EUR/USD Technical Analysis: Bearish Momentum Persists

The EUR/USD pair remains locked within a bearish impulse that originated on April 17. Despite attempts by bulls to recover, recent price action indicates a lack of conviction, suggesting that the pair is currently more susceptible to further downside than a sustained reversal.

Technical Structure and Liquidity

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Recent price action reflects a liquidity sweep that points toward continued downward pressure. Bears are currently targeting the swing low at 1.1325, a level that may attract further sell-side liquidity. The technical outlook remains bearish, as the pair has yet to form definitive bullish patterns, and the market remains largely confined to a range-bound environment.

Fundamental Overview

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The fundamental backdrop remains complex, as the market shows limited reaction to geopolitical shifts in the Middle East. Although recent U.S. labor market data has been underwhelming, with job creation falling short of expectations, the U.S. dollar maintains resilience. Easing inflation and a cooling labor market force the Federal Reserve to adopt a more cautious approach to monetary policy, yet the dollar remains supported despite this shift.

Geopolitical Factors

Recent escalations regarding Iranian shipping and oil exports have had minimal impact on currency price action. The market appears to have largely priced in these geopolitical developments, showing muted reactions to repeated violations of existing agreements. Consequently, geopolitical factors are currently considered a secondary driver compared to structural market trends.

Market Outlook and Trading Strategy

The long-term bullish trend remains technically unresolved, but current conditions do not support immediate long positions. Traders should prioritize awaiting clear technical confirmation or bullish patterns before entering the market. Alternatively, monitoring the pair for a potential sell signal within the 'Bearish Imbalance 17' zone is recommended as the most prudent analytical approach.

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