The EUR/USD pair has been declining for ten consecutive days, and such a steady drop raises questions about why the U.S. dollar has been strengthening for two weeks, ignoring chart patterns and many economic developments. Reports on the labor market and inflation from a week ago, as well as the "recessionary" GDP data, can already be forgotten. However, in my view, on Friday and Saturday, U.S. President Donald Trump demonstrated to America and the world that the law is merely a tool in the hands of the current administration. What is the point of canceling trade tariffs if the president introduces new ones just two hours later? What is the point of reviewing the legality of trade restrictions for months if no one can block Trump's decision? Dictatorship has prevailed over democracy and the rule of law in the United States. Trump has shown that he alone will make decisions, while the "supporting cast," represented by Democrats or even the Supreme Court of the United States, can only pretend to influence his decisions. The market, meanwhile, is in a state that is difficult to describe. On Friday, there was almost no movement despite an important news backdrop. Imbalance 12 has not been invalidated, but it has not produced any reaction either. The bullish trend remains in place, yet quotes continue to fall instead of rising.
The most recent bullish imbalance (No. 12) could have been invalidated on any day last week, but this has not happened so far. We have not seen a second reaction to this pattern, so there have been no grounds to open new long positions. Overall, there remains the option of taking liquidity below the February 6 low, but even signs of liquidity grabbing are not currently visible. The chart picture is ambiguous, as is the market's reaction to events in the United States.
Technically, the chart continues to signal bullish dominance. The bullish trend remains intact. At present, the pair is close to temporarily setting aside the bullish scenario, but the invalidation of imbalance 12 has still not occurred. In any case, there are no bearish patterns from which traders could open short positions. And as already noted, the trend remains bullish.
Monday's news background was extremely weak. Germany's business climate index came in slightly above traders' expectations, but the market barely reacted. There were no other reports today and none are scheduled. Traders did not even consider it necessary to respond to Saturday's tariff increase to 15% announced by Trump.
The bulls have had sufficient reasons for a new advance for the past six to seven months, and these reasons have at least not diminished with each passing week. These include the dovish (in any case) outlook for FOMC monetary policy, Donald Trump's overall policy stance (which has not changed recently), the U.S.–China confrontation (where only a temporary truce has been reached), protests by American citizens against Trump under the "No Kings" banner, labor market weakness, the autumn government shutdown (which lasted one and a half months), the February shutdown, U.S. military actions toward certain countries, criminal proceedings against Powell, the "Greenland issue," and worsening relations with Canada and South Korea. Therefore, in my opinion, further growth of the pair would be entirely logical.
I still do not believe in the emergence of a bearish trend. The news background remains extremely difficult to interpret in favor of the dollar, so I am not attempting 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 points to reach it, which still appears to be a very challenging task given the current news environment and the present chart structure, where there is not a single bearish pattern.
The nearest upward target for the euro was 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 identified: 1.2348 and 1.2564. These correspond to two peaks on the monthly chart.
Economic Calendar for the U.S. and the Eurozone:
United States – ADP Employment Change (weekly) (13:00–15:00 UTC).
On February 24, the economic calendar contains only one secondary event. The impact of the news background on market sentiment on Tuesday may therefore be very limited.
EUR/USD Forecast and Trading Advice:
In my view, the pair remains in the process of forming a bullish trend. Despite the fact that the news background favors the bulls, bears have repeatedly 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 a certain degree of growth, and the bullish trend remains intact. In recent weeks, the price action has not been what many would prefer to see, but a bullish signal with renewed upward movement could still form through liquidity taking within imbalance 12.
