EUR/USD Technical Analysis: Bearish Momentum Persists

EUR/USD Market Overview

The EUR/USD pair has extended its decline for the fifth consecutive session ahead of upcoming central bank meetings from both the European Central Bank and the Federal Reserve. This downward movement mirrors a previous bearish phase where the euro lost nearly 600 points over 25 trading days. Traders continue to reduce risk exposure, favoring the safe-haven US dollar amid rising geopolitical tensions and civil unrest in Europe.

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Market participants are currently pricing in safe-haven demand influenced by multiple external factors. These include large-scale protests over the cost of living in European nations and heightened geopolitical risks surrounding the Middle East and Ukraine. Consequently, capital flows are favoring the US currency, despite a lack of aggressive hawkish surprises from recent Federal Reserve commentary.

Technical Outlook and Price Action

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From a technical perspective, the ongoing price action provides no clear indication that the euro's decline is reaching exhaustion. Imbalance 24 remains a valid structural level, and a price reaction here could trigger fresh sell signals for the pair. Bearish momentum remains strong, while buyers struggle to establish constructive reversal patterns.

Bulls attempting a recovery would first need to invalidate Imbalance 24 and generate verified bullish signals. A potential liquidity sweep below the June low at 1.1066 represents a possible area of interest for long positions, though additional confirmation is required before entering the market. Short positions remain favored while the current chart structure maintains its bearish bias.

Fundamental Drivers and Economic Calendar

Recent US macroeconomic data provided additional support to sellers, as durable goods orders increased by 1.8% in September, exceeding the 1.5% consensus forecast. However, market participants note that the dollar's appreciation preceded the data release, suggesting broader risk aversion is driving currency movements rather than isolated economic reports.

The upcoming economic calendar features critical high-impact events, most notably the Federal Reserve interest rate decision and subsequent press conference. While both central banks are widely expected to leave interest rates unchanged, the policy announcements and forward guidance could introduce significant volatility to currency markets.

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