EUR/USD Analysis: Persistent Bearish Momentum and Outlook

EUR/USD Market Overview and Price Action

The EUR/USD pair has resumed its downward trajectory, extending a prolonged bearish trend that has persisted over the last two months. Previous price action saw the euro decline significantly over a 25-day trading period, and a similar pattern has re-emerged despite no immediate catalyst from recent economic data. Major scheduled events, including central bank meetings and key inflation and GDP releases from the US and Germany, have failed to alter prevailing market sentiment.

Would you like to read more market analysis about EUR/USD, Smart, and Money?

Recent policy decisions from the Federal Reserve and the European Central Bank kept interest rates unchanged, aligning closely with market expectations. While stronger-than-expected US third-quarter GDP growth and accelerated September PCE inflation provided moderate support for the US dollar, the broader fundamental divergence does not fully account for the scale of the dollar's multi-month rally.

Technical Analysis and Key Levels

Grid trading done right – try the robust Grid Expert Advisor. Details here.

From a technical perspective, the current market structure points unequivocally toward a continuation of bearish momentum. Price action remains influenced by Imbalance 24, which may act as a catalyst for a new sell signal upon retest. Existing short positions should be maintained until clear bullish reversal patterns or signals develop on the charts.

For the bulls to initiate a meaningful recovery, they must first invalidate Imbalance 24 and establish concrete bullish formations. Potential opportunities for buyers are currently limited, with the primary areas of interest residing near the June low of 1.1066 and the 1.1114 support level established several weeks ago. A liquidity sweep below the 1.1066 mark could offer a potential entry point for long positions, though additional confirmation is required.

Fundamental Outlook and Trading Advice

Despite the persistent strength of the US dollar, structural and global factors—including ongoing geopolitical tensions in Europe—continue to weigh heavily on the European currency. Both central banks navigate similar economic environments, yet market participants are largely ignoring positive developments for the euro while favoring the greenback.

Traders should closely monitor upcoming high-impact releases, including German and EU third-quarter GDP figures and the German Consumer Price Index (CPI), which could generate moderate volatility. In terms of trading strategy, premature buying of the euro is discouraged. Short positions should be held until definitive bullish reversal signals emerge, while new sell signals may be monitored near active imbalances.

Combine these insights with powerful automation. Discover RobotFX products and take your trading to the next level.