EUR/USD Technical Analysis: Market Awaits US Inflation Data

EUR/USD Market Overview

The EUR/USD pair remains locked in a bearish impulse originating from mid-April, with recent bullish attempts failing to produce significant momentum. While the euro has managed a modest recovery over the past two weeks, the price action remains constrained within a narrow range, signaling overall market indecision ahead of key economic updates.

Economic Drivers and Policy Outlook

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Market attention is currently focused on the upcoming U.S. June Consumer Price Index (CPI) report and scheduled testimony from Federal Reserve official Kevin Warsh. Although Warsh is expected to maintain a hawkish stance regarding inflation control, recent U.S. labor market data showing a cumulative shortfall of 100,000 jobs suggests the Federal Reserve may adopt a more cautious approach toward further monetary tightening.

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Geopolitical and Fundamental Factors

Geopolitical tensions, particularly involving the Middle East and energy exports, have increased, yet the market has shown a muted reaction to these developments. Despite the broader macroeconomic and geopolitical backdrop, the U.S. dollar maintains dominance, even as structural questions persist regarding the fundamental justification for its current strength in the face of long-term policy trends.

Technical Analysis and Price Levels

From a technical perspective, the bearish impulse initiated on April 17 remains the primary driver. While imbalance 18 has been invalidated following weak labor data, bearish imbalance 17 remains unfilled and represents a key objective for the current trend. Liquidity sweeps below the August 1, 2025, low provide a minor point of interest for the bulls, though a clear reversal pattern has yet to emerge.

Trading Outlook

Current market conditions lack a compelling setup for initiating long positions. Analysts remain neutral, awaiting either firm technical confirmation of a bullish reversal or a fresh sell signal within the active bearish imbalance zone. Investors are advised to monitor the U.S. CPI release and Federal Reserve commentary on Tuesday for potential shifts in sentiment.

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