The EUR/USD pair remains within the local "bearish" impulse that began on April 17, but with each passing day, the bulls are getting closer to establishing their own trend. To do this, they need to invalidate "bearish" imbalance 17, which could have happened as early as a week ago. However, at the most crucial moment, the bulls weakened their grip and have still been unable to consolidate above imbalance 17. The news background remains unfavorable for the bears. Traders expected Kevin Warsh to either promise an interest rate hike in September or at least adopt "hawkish" rhetoric that would make it clear that policy would be tightened in response to accelerating inflation. Instead, Warsh referred to economic data that had been convincing us of the opposite throughout the previous week. In July, the number of new Nonfarm Payrolls jobs decreased by 23,000. In other words, essentially no jobs were created, and their total number declined. Thus, one of the most important indicators of the US economy has declined for the fourth consecutive month. It is now already below the 0 level, compared with a normal range of 100–150K. All of this suggests that no FOMC policy tightening should be expected in September. As I warned in recent weeks, if the labor market once again posts a weak result, this will be a sufficiently strong reason for the Fed to abandon a rate hike. Of course, this cannot be stated with certainty, but I am almost certain that we will not see policy tightening in the near future.
Let me remind you that expectations of Fed policy tightening are currently merely expectations that can change against the backdrop of geopolitical developments or economic data. The latest US labor-market data showed weak figures, inflation slowed, and GDP growth declined. These three factors raise doubts about an FOMC rate hike in the foreseeable future. If Donald Trump is not misleading the markets and the Strait of Hormuz is opened, this will give the market another reason to sell the "safe-haven dollar," which will no longer be needed if the conflict is at least partially resolved.
Geopolitics remains secondary for traders but is affecting the economy. Tehran and Washington continue to negotiate through intermediaries, if this can even be called negotiations. If the Strait of Hormuz is opened, this will lower oil prices and cause inflation to slow. In this case, the probability of FOMC policy tightening will become even lower, as inflation will continue to slow. Although it is already relatively low.
The current chart structure indicates that the "bearish" impulse that began on April 17 remains in place. "Bearish" imbalance 17 was filled, but the reaction to it was weak. Thus, this pattern may be invalidated. A "bullish" imbalance 19 has also formed, allowing the bulls to look to the future with optimism. If imbalance 17 is invalidated while imbalance 19 remains unfilled, traders will have to wait for new "bullish" patterns before they can open long positions.
There was no economic background on Monday, which explains the virtually zero trader activity. On Friday, the bulls launched another attack, but in my view, it was too weak. The bulls could have finally canceled the "bearish" impulse, but it remains valid for now because imbalance 17 has still not been invalidated.
There are still a huge number of reasons for the bulls to attack in 2026, and even the war in the Middle East has not reduced their number. Structurally and globally, Trump's policies, which led to a significant decline in the dollar last year, have not changed. At present, I do not see any significant factors supporting the US currency despite the FOMC's "hawkish" stance. Nevertheless, the bears are still the ones attacking, while there are no "bullish" signals.
Economic Calendar for the US and the European Union:
US – Existing Home Sales (14:00 UTC).On August 11, the economic events calendar contains one secondary release. The impact of the economic background on market sentiment on Tuesday will be extremely weak or absent.
EUR/USD Forecast and Trading Tips:
In my view, the pair remains at the stage of forming a "bullish" trend. The news background changed sharply in favor of the bears five months ago, but the trend itself cannot be considered canceled or complete. Thus, the bulls may well continue their advance after two liquidity sweeps from clearly defined lows. A sell signal may have formed within imbalance 17, but the reaction was weak, so this pattern will most likely be invalidated. A "bullish" signal may form within imbalance 19, but the price is moving increasingly farther away from this pattern. Despite the fairly strong appreciation of the euro, there is currently no clear basis for opening long positions. It is necessary to wait for new "bullish" patterns to form, for imbalance 19 to be filled, or alternatively to trade the British pound.