FX.co ★ EUR/USD. Smart Money. The Market Pauses in Anticipation

The EUR/USD pair has been declining for eleven consecutive days, and such steady weakness leaves one wondering why the US dollar has been rising for two weeks, ignoring chart patterns and many economic developments. We can already forget about last week's labor market and inflation reports, as well as the "recessionary" GDP. On Friday and Saturday, Donald Trump showed that the current administration does not consistently follow the law. What is the point of canceling trade tariffs through the courts if the president introduces new ones just two hours later? What is the point of reviewing the legality of new trade restrictions for months if no one can block Trump's decision?

Dictatorship has defeated democracy and the rule of law. Trump has shown that only he will make decisions, while the entire "supporting cast" in the form of Democrats or the Supreme Court can merely pretend to influence his actions. The market, meanwhile, is in a state that is extremely difficult to describe. Imbalance 12 has not been invalidated, yet it has produced no reaction. The bullish trend remains intact, but prices first declined instead of rising, and now they have been moving sideways for three days.

The latest bullish imbalance 12 could have been invalidated on any day last week, but that has not happened so far. We have not seen a second reaction to this pattern, so there have been no grounds for opening new long positions. Overall, there remains the option of liquidity being taken from the February 6 low, but there are currently no signs of liquidity being swept. The chart picture is ambiguous, as is the market's reaction to developments in the United States.

The technical picture continues to signal bullish dominance. The bullish trend remains intact. At the moment, the pair is close to temporarily setting aside the bullish scenario, but the invalidation of imbalance 12 has not yet occurred. In any case, there are no bearish patterns from which traders could open short positions. And the trend, as already noted, is bullish.

The news background on Tuesday was extremely weak. One, not particularly important report in the United States was all the information traders received today. Even on Friday, when there was a flood of information, the market showed no movement. Thus, the market is frozen in anticipation. The only question is: waiting for what?

Bulls have had sufficient reasons for a renewed advance for the past 6–7 months, and with each passing week those reasons are at least not diminishing. These include the (in any case) dovish prospects for FOMC monetary policy, Donald Trump's overall policy (which has not changed recently), the confrontation between the United States and China (where only a temporary truce has been reached), public protests in the United States against Trump under the "No Kings" banner, weakness in the labor market, the autumn government shutdown (which lasted a month and a half), the February shutdown, US military actions against certain states, criminal proceedings against Powell, the "Greenland confusion," and worsening relations with Canada and South Korea. Thus, in my view, further growth of the pair would be entirely logical.

I still do not believe in a bearish trend. The news background remains extremely difficult to interpret in favor of the dollar, which is why I do not attempt to do so. The blue line indicates the price level below which the bullish trend could be considered complete. Bears would need to push the pair down about 280 pips to reach it, which still appears to be a very difficult task given the current news backdrop and the technical picture, where there is not a single bearish pattern. The nearest upside target for the euro had been the bearish imbalance at 1.1976–1.2092 on the weekly chart, formed back in June 2021. This pattern has now been fully filled. Above that, two levels can be highlighted — 1.2348 and 1.2564. These levels correspond to two peaks on the monthly chart.

News calendar for the United States and the European Union:

• European Union – German Consumer Confidence Index (07:00 UTC).
• European Union – Q4 GDP change (07:00 UTC).
• European Union – Consumer Price Index (10:00 UTC).

On February 25, the economic calendar contains three secondary entries. The impact of the news background on market sentiment on Wednesday may be very limited.

EUR/USD forecast and trading advice:

In my view, the pair remains in the formation stage of a bullish trend. Despite the fact that the news background favors the bulls, bears have regularly launched attacks in recent months. Nevertheless, I do not see realistic reasons for the start of a bearish trend.

From imbalances 1, 2, 4, 5, 3, 8, and 9, traders had opportunities to buy the euro. In all cases, we observed some growth, and the bullish trend remains intact. In recent weeks, we have not seen the type of movement we would like to see, but through a liquidity sweep within imbalance 12, a bullish signal with renewed growth could still form.