The EUR/USD pair showed slight growth on Monday and Tuesday, and on Wednesday it literally soared on news of a ceasefire agreement between Iran and the United States. In the current situation, it's hard to even decide where to begin, so I'll start with technical analysis. As we can see, there was a reaction to bullish imbalance 12, after which a new upward move began. In recent days, I have been drawing traders' attention to this pattern. Therefore, traders had the opportunity to open long positions, which are now showing very strong profits.
As for the news background, hostilities in the Middle East have resumed. So it's unclear whether it even makes sense to talk about a ceasefire, considering that just a few hours ago the U.S. attacked another refinery in Iran, Iran launched missiles toward Kuwait, and Israel is actively bombing Lebanon. Personally, it remains unclear who agreed on what ceasefire yesterday if it lasted only about 15 hours. For now, it would be more accurate to speak about the continuation of the conflict. However, I won't jump ahead and will wait for official statements—especially from Trump.
All the growth of the U.S. dollar over the past 4–5 weeks was driven by geopolitics. As soon as the U.S. and Iran agreed on a two-week ceasefire, bears immediately retreated, and bulls rushed into action. At this point, the ceasefire already seems irrelevant, but what matters is that a bullish signal was generated and the EUR/USD pair is rising rapidly. What more is needed?
I have repeatedly said that I do not believe the bullish trend has ended, despite the break of important trend-forming lows. The price movement over the past two months could evolve into a bearish trend if geopolitics continues to support the dollar. However, I still doubt the ability of bears to sustain a prolonged attack. Further strengthening of the U.S. dollar is possible only if geopolitics continues to strongly support bearish sentiment—and as I've noted before, that would require not just a tense situation in the Middle East, but a worsening one.
The chart picture has changed over the past couple of days. First, the price may soon react to imbalance 11 and resume its downward movement. However, it's worth repeating that the bullish trend remains intact. Second, the price has already reacted to imbalance 12, forming a bullish signal within a bullish trend. Third, a new bullish imbalance is very likely to form this week, which will serve not only as a zone of interest for buyers but also as a support zone for the euro.
There were no significant economic events on Wednesday. Since early morning, traders have been reacting solely to the ceasefire between the U.S. and Iran, and did so with such enthusiasm that even when new missile strikes occurred in the Middle East, bullish traders continued to push their narrative. In the near future, it will be important to understand what exactly happened during the day, why the ceasefire was broken, and what comes next.
There are still many reasons for bulls to remain active, and even the outbreak of conflict in the Middle East has not reduced them. Structurally and globally, Trump's policies—which led to a significant decline in the dollar last year—have not changed. In the short term, the U.S. currency may strengthen amid a flight to safety, but this factor cannot provide sustained support without ongoing escalation in the Middle East. And there are no other strong supporting factors for the dollar. I still do not believe in a sustained bearish trend. The dollar has received temporary support, but what will drive further bearish pressure?
Economic Calendar (U.S. & Eurozone):
- Eurozone – Change in German industrial production (06:00 UTC)
- U.S. – Core Personal Consumption Expenditures (12:30 UTC)
- U.S. – GDP change (Q4) (12:30 UTC)
- U.S. – Initial Jobless Claims (12:30 UTC)
On April 9, the economic calendar includes four entries, with U.S. GDP being the most notable. The impact of the news background on market sentiment on Thursday may be limited.
EUR/USD Forecast and Trading Tips
In my view, the pair remains in the process of forming a bullish trend. The news background sharply shifted direction about a month and a half ago, but the trend itself cannot yet be considered fully canceled or completed.
Thus, in the near term, bulls may well launch a new advance if geopolitics allows. Bears may receive a signal from imbalance 11 soon, but if the geopolitical situation does not worsen further, that signal may not materialize.
Bulls already had an opportunity to open long positions based on the signal from imbalance 12, targeting around the 1.1670 level. This target has already been reached, so the upward movement may continue toward the yearly highs.
