EUR/USD Technical Analysis: Bears Maintain Control

The EUR/USD pair experienced a technical correction late last week following a liquidity sweep below the recent low, creating conditions for a modest recovery. However, bears quickly countered this move when liquidity was swept above the October 16 high. Despite several opportunities to mount a sustained advance following recent US political developments and eurozone inflation data, bullish momentum remains absent.

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

Fundamental factors over the past two months have frequently pointed in favor of the European currency, yet price action on the charts has failed to reflect this. Eurozone inflation has accelerated to 4%, signaling further monetary policy tightening by the European Central Bank (ECB). Meanwhile, recent political developments in the US indicate a divided Congress, which could lead to significant delays in key legislative decisions.

While the Federal Reserve's hawkish stance has driven US dollar appreciation over the past two months, other central banks are also actively adjusting policy. The ECB is positioned to deliver its third rate hike in December, and other global central banks are advancing their own tightening cycles. Despite these supportive conditions for the euro, market participants continue to favor the US dollar.

From a technical perspective, the bearish impulse remains firmly intact with Imbalance 24 continuing to act as a key reference level. A test of this zone could provide a fresh sell signal, while bulls would need to invalidate Imbalance 24 and establish clear reversal patterns before any meaningful recovery can occur. A liquidity sweep above the 1.1270 resistance area further reinforces the short-term bearish bias.

Capture price channel breakouts with the Price Channel Expert Advisor. Explore now.

Market sentiment remains heavily tilted toward selling the euro, overriding a fundamental backdrop that theoretically favors the European currency. Traders should closely monitor upcoming macroeconomic releases, including US Nonfarm Payrolls, the Unemployment Rate, and the University of Michigan Consumer Sentiment Index, which could introduce heightened volatility during the latter half of the trading session.

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