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The EUR/USD pair is ending the current week with total losses of 200 points. The decline in the European currency began last week as the market prepared for the FOMC key rate hike on Wednesday. As it turned out, the dollar's 100-point strengthening was insufficient to reflect the FOMC's monetary policy tightening. The dollar rose by another 100 points. Thus, for an entire week, the bulls attacked based solely on expectations of a Fed rate hike. As part of this move, the European currency fell almost to Imbalance 19, which can currently be considered its last hope and support. If this imbalance is invalidated, the European currency will not simply continue to decline but has every chance of falling below the psychological level of $1.10. Who expected such a development at the beginning of the year?
On Wednesday evening, the FOMC indicated its readiness to continue tightening policy, which was quite enough for the bears to launch new attacks. If Kevin Warsh says once again tomorrow that inflation in the United States is too high, will the market rush to buy the dollar again? In my opinion, we are going around in circles. In any case, even after monetary policy tightening in September and possible tightening in November or December, I do not see what other reasons could prompt traders to continue buying the US currency. The dollar has indeed performed very well over the past few weeks, but what factors supported it during this period? FOMC monetary policy tightening and nothing else?
Overall, in my opinion, the information background continues to favor the bulls. First, any chart clearly shows that the European currency began its rise from relatively low levels (over the past year) relative to the average price over the past year. This means that it still has growth potential. Second, the market continues to doubt that the FOMC will maintain tighter monetary policy over an extended period. Third, economic data from the United States have recently been mostly disappointing. Fourth, geopolitical factors no longer support the bears or 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 United States and Canada. Eighth, the US labor market in 2026 is performing only slightly better than in 2025. Thus, I currently see no reason for a bearish advance.
The current chart pattern indicates a break in the bullish momentum. Only Bullish Imbalance 19 can save the bulls. If a reaction to it occurs or a reversal in favor of the euro takes place above this pattern, the bulls may attempt to start a new trend. I repeat: apart from the FOMC's monetary policy tightening, I do not see a single reason for the dollar to rise. In addition, a new Bearish Imbalance 23 was formed yesterday, and the price may react to it as early as today or on Monday.
The economic background on Friday caused no discomfort for the bears. Trader activity declined, as the only noteworthy events today are Christine Lagarde's speech and US industrial production. Neither the first event nor the second was initially expected to attract much interest.
There are still a huge number of reasons for the bulls to attack in 2026. Structurally and globally, Trump's policy, which led to a significant decline in the dollar last year, has not changed. At present, I do not see any significant factors supporting the US currency despite the FOMC's hawkish stance. Geopolitical factors, which supported demand for the US currency during most of the first half of 2026, no longer do so.
Economic Calendar for the United States and the European Union:
On September 21, the economic calendar contains no noteworthy events. The economic background will have no impact on market sentiment on Monday.
EUR/USD Forecast and Trading Tips:
In my opinion, the pair remains in the process of forming a bullish trend that has taken a one-year pause. The information background shifted sharply in favor of the bears six months ago, but the trend itself cannot be considered canceled or completed. In the long term, I would say that the pair is in a range. However, the range does not invalidate the broader bullish trend. Thus, the bulls may resume their advance in 2026, but their only remaining opportunity is Imbalance 19. A sell signal was also formed in Imbalance 22 this week, so there is currently no basis for talking about bullish attacks. The target for the European currency's decline remains the 1.1406–1.1434 level. Imbalance 23 may give the bears another opportunity to continue putting pressure on the pair.
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