EUR/USD Technical Analysis: Bearish Momentum Continues

Market Overview and Technical Status

The EUR/USD pair remains locked in a bearish impulse that originated on April 17. Despite sporadic attempts by bulls to regain control, these efforts have lacked conviction, leaving the pair susceptible to further downside pressure. Current technical indicators suggest the pair is closer to a retest of lower levels than an immediate trend reversal.

Key Price Levels and Liquidity

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The primary objective for the bearish trend is the recent swing low at 1.1325. Market participants are monitoring this level, as a liquidity sweep below this point may provide the necessary conditions for bulls to re-enter the market. Currently, Bearish Imbalance 17 remains unmitigated, while technical setups for bullish positions are notably absent.

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Fundamental Factors

Recent U.S. economic data, including a cooling labor market and signs of disinflation, have complicated the outlook for the Federal Reserve. Although the FOMC maintains a hawkish stance, the U.S. dollar no longer benefits from unequivocal policy support. Conversely, recent geopolitical volatility in the Middle East has provided limited impact on market sentiment, with traders largely ignoring recurring tensions in the region.

Economic Sentiment and Outlook

Tuesday's release of the ZEW Economic Sentiment Index for Germany and the Eurozone exceeded expectations but failed to provide a lift for the euro, underscoring the dominance of the current bearish trend. With no major data scheduled for July 22, the market is expected to remain driven by technical developments rather than fundamental catalysts.

Trading Strategy

While long-term structural arguments for the EUR/USD remain intact, initiating long positions at current levels is premature. Traders are advised to await clear, technical Smart Money confirmation before anticipating a trend reversal. Until bullish patterns emerge, the focus remains on the potential for a decline toward the 1.1325 support level or further opportunities within the established Bearish Imbalance 17.

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