The EUR/USD pair has lost around 100 points over the past five days. I would not call the decline "strong," but it has occurred on a daily basis. Interestingly, the dollar began to strengthen sharply last Thursday, when the ECB made an absolutely hawkish decision that should have allowed the bulls to continue their advance. The bulls, not the bears. However, at the most critical moment, the bulls once again retreated and gave up, essentially without a fight. Let me remind you that the main reason for the bears' current strength is the Fed meeting, from which traders expect monetary policy tightening. Heated debate continues in the market over whether Kevin Warsh will be able to distance himself from the White House and Donald Trump personally, who appointed him as the FOMC chair, and make a decision to tighten policy. There is also the question of whether it makes sense to raise the rate specifically in September. In my view, the question now should be whether the dollar has made a false start and whether the market has begun buying dollars too aggressively and without sufficient justification. Clearly, FOMC policy tightening is a bullish factor for the US currency, but at the same time, the dollar has already been rising for five days. Is this not enough as a reaction to a hawkish Fed decision that has not actually been announced yet? This creates an interesting picture: the Fed has not even announced its decision, no trader knows how much the rate will be raised over the coming months or years, yet the dollar is rising as if the Fed were the only central bank that would raise rates while all other central banks would only cut them.
Overall, in my view, the information backdrop remains on the side of the bulls. First, it is clearly visible on any chart that the European currency began its rise from relatively low levels over the past year compared with the average price over the same period. This means that it still has upside potential. Second, the market continues to question whether FOMC monetary policy will remain tight over an extended period. Third, economic data from the US have recently been mostly disappointing. Fourth, geopolitical developments are no longer supporting the bears and the dollar. Fifth, the ECB has already tightened monetary policy twice in 2026. Sixth, the US Treasury decided to increase its purchases of long-term bonds, which reduces demand for the dollar. Seventh, a trade war has begun between the US and Canada. Eighth, the US labor market in 2026 is doing only slightly better than it did in 2025. Therefore, I currently see no reason for a bearish advance.
The current chart pattern indicates that the bullish momentum has been broken, although it may still hold. Bullish imbalance 21 provided an excellent opportunity for the bulls to continue the advance that began back in June, but this pattern was invalidated. The bulls' only hope now lies in bullish imbalance 20, which cannot yet be considered invalidated. Therefore, a reaction to this pattern may still occur, although now virtually any minimal decline in the euro will result in this pattern being invalidated as well.
The economic backdrop on Wednesday was of no significance and had no impact on traders' sentiment. Although the market was still keeping itself under control in the morning, new dollar purchases began in the second half of the day. The report on industrial production in the European Union was slightly better than traders' expectations, but what difference does it make if the euro is falling even during a hawkish ECB meeting? US retail sales increased by 1.2%, which only intensified pressure on the European currency.
There are still a huge number of reasons for the bulls to attack in 2026. 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. Geopolitical developments, which supported demand for the US currency during most of the first half of 2026, are no longer doing so.
News calendar for the US and European Union:
European Union – Consumer Price Index for August (final estimate) (09:00 UTC).US – Building permits (12:30 UTC).US – Housing starts (12:30 UTC).US – Change in initial unemployment benefit claims (12:30 UTC).The September 17 economic calendar contains four entries that hardly any traders are likely to pay attention to. The economic backdrop may have a very weak influence on market sentiment on Thursday or may have no influence at all.
EUR/USD forecast and trading advice:
In my view, the pair remains in the process of forming a bullish trend that has paused for an entire year. The information backdrop changed sharply in favor of the bears six months ago, but the trend itself cannot be considered invalidated or complete. In the long term, I would say that the pair is trading in a range. However, the range does not invalidate the broader bullish trend. Therefore, the bulls may resume their advance in 2026, but their only remaining opportunity is imbalance 20. A bearish imbalance 22 was also formed yesterday, from which the price may react today and form a signal. The downward target for the European currency could be the 1.1406–1.1434 level. Traders' sentiment may change in the evening, as the outcome of the FOMC meeting cannot be reliably predicted in advance.