We continue to observe a strong bullish trend, which shows no signs of ending. There are still no reasons to consider it complete. I understand that the signing of a trade agreement between the EU and the U.S., which clearly benefits the U.S. more, is a strong argument in favor of a stronger dollar. And indeed, over the past few days, we've seen continuous bearish attacks. However, I wouldn't rush to any conclusions. Two days of declines in the pair are not enough to signal a trend reversal. Imbalance 2 is no longer relevant, as the reaction to it occurred on July 17, followed by a rise in the pair. The news background changed on Monday, so the downward correction may take some time.
Bears may soon have the opportunity to launch an attack. In that case, there are no levels available to stop their pressure and initiate new buying within the current bullish trend all the way down to the 1.1100 level. Since I do not yet believe a new bearish trend is starting and only expect a corrective pullback, I will closely monitor a possible liquidity grab near the July 17 swing low.
Traders remain focused on Trump's trade war, which shows no sign of ending. Despite the signing of several important trade agreements, many countries remain in a state of uncertainty. Traders still believe Trump plans to impose tariffs on virtually every country in the world. Such a news backdrop is unlikely to help bears form a sustainable trend. The bullish trend structure remains intact, meaning the upward movement in the euro could resume. The only question is—from where?
The blue line shows the price level below which the bullish trend can be considered broken. As we can see, bears would need to push another 550 points down to reach it, which seems unlikely in the near term. The nearest realistic upward target for the euro could be the bearish imbalance between 1.1976 and 1.2092 on the weekly chart, which was formed back in June 2021. That was the last time the euro traded that high. I do not consider this pattern to be particularly strong, as it is unlikely that traders will look to rebalance the price in this area four years later. It's more of a formal target—there simply aren't any others right now.
All of the bears' recent attacks have been weak, largely because the news backdrop hasn't supported them. Some individual reports and events have favored the U.S. dollar, but it hardly matters when more significant factors are holding back bearish momentum. It will be very interesting to see how long the bears can rely on a single U.S.–EU agreement.
Economic Calendar for the U.S. and Eurozone:
- Eurozone – Germany Q2 GDP (08:00 UTC)
- Eurozone – Eurozone Q2 GDP (09:00 UTC)
- U.S. – ADP Employment Change (12:15 UTC)
- U.S. – Q2 GDP (12:30 UTC)
- U.S. – Fed interest rate decision (18:00 UTC)
- U.S. – Fed press conference (18:30 UTC)
July 30 features six major economic events. The news background may have a strong influence on market sentiment throughout Wednesday.
EUR/USD Forecast and Trading Recommendations:
The price showed a triple reaction to the weekly bullish imbalance, broke the bearish structure, and as a result, only further growth was to be expected—something we've observed for six consecutive months. In my view, the pair may now be in the final stage of the bullish trend, but it still depends on the news flow. As long as the trade war does not de-escalate, bearish traders will remain in a vulnerable position.
The trend remains bullish, so selling cannot take priority over buying. Bullish Imbalance 1 provided grounds for renewed growth toward the 1.1976–1.2092 level, and traders could place buy trades based on that pattern. New euro purchases were also possible from Imbalance 2, as a reaction followed from that area. At this point, it is advisable to lock in profits on those trades—although the decision on where to take profit remains up to the trader. The news background still allows for some dollar strength in the short term, but with plenty of data releases this week, everything can change in the blink of an eye. That said, it's a fact—there are currently no clear zones for initiating new buy positions.
