16.06.202619:06 Forex Analysis & Reviews: EUR/USD – Smart Money Analysis: Buyers Strengthen Their Positions

The EUR/USD pair has been rising for seven consecutive days. Initially, this advance appeared to be nothing more than a standard corrective pullback that would inevitably end within Bearish Imbalance 16. However, after seven days, it can be said that bullish traders have an excellent opportunity to regain the initiative and resume the bullish trend. I would like to remind readers that in recent months, I have repeatedly stated that the bullish trend has not ended. It has merely been paused due to the complex geopolitical situation in the Middle East.

Take a close look at the recent candles. On Tuesday and Wednesday of last week, the price rebounded twice from Bearish Imbalance 16, which could have been interpreted as a sell signal. Everything looked logical and consistent with the prevailing market structure. However, on Thursday, the pair posted a strong rally, paused slightly on Friday, and continued to advance on Monday. Why? Because on Thursday, Donald Trump sharply changed his stance toward Iran and once again promised a deal over the weekend. On Monday, this information was confirmed by Trump, Iran, and even Pakistan. Although the agreement has not yet been signed, the fact that all three parties involved in the negotiations have confirmed it significantly increases the likelihood of its conclusion. At present, Bearish Imbalance 16 is close to being invalidated, which would serve as the first signal that the bullish trend is resuming.

In the near term, the pair's direction and trader sentiment will continue to depend on geopolitical developments. If Tehran and Washington ultimately sign a memorandum of understanding, extend the ceasefire, lift restrictions on the Strait of Hormuz, and begin negotiations on the nuclear issue, bears will likely be forced to continue retreating, while the euro and the pound will extend their gains. However, traders are not rushing to conclusions and are waiting for the agreement to be formally ratified, which is expected to take place in Switzerland on Friday.

In addition, Christine Lagarde made it quite clear this week that inflation in the euro area remains above acceptable levels and that previous monetary tightening alone has not been sufficient to curb consumer price growth. The ECB may also raise interest rates again in July, which is providing additional support for bulls.

Under the current circumstances, there are simply no actionable patterns available. If Bearish Imbalance 16 is invalidated, it will mean that the bearish impulse has been broken. In that case, traders should expect bullish patterns to emerge and trade accordingly. A bullish imbalance may be formed this week, which could later provide opportunities to open long positions.

Once again, I must emphasize that the entire appreciation of the U.S. dollar between January and March was driven solely by geopolitical factors. As soon as the United States and Iran agreed to a ceasefire, bears immediately retreated, and for more than a month the market was dominated primarily by bullish traders. At present, the chances of a formal agreement remain fairly high, but the market continues to treat any reports about a rapid end to the conflict with considerable skepticism. The euro is advancing, but its gains remain measured and restrained.

As has often been the case recently, Tuesday's economic data attracted little interest from market participants. I do not attribute the euro's rise to the two ZEW Economic Sentiment indices released for Germany and the euro area, even though both figures came in significantly above expectations. U.S. economic data also had little influence on trader behavior.

Bulls still have numerous reasons to remain active in 2026, and the outbreak of war in the Middle East has done little to reduce their number. From both a structural and global perspective, Trump's policies—which contributed to a significant decline in the dollar last year—have not changed. In the coming months, the U.S. currency may occasionally strengthen as investors seek safe-haven assets, but this factor would require a continuous escalation of tensions in the Middle East. I still do not believe in a sustained bearish trend for EUR/USD. The dollar has received temporary support from the market, but what will provide bears with a long-term catalyst for further gains?

News Calendar for the United States and the European Union:

• European Union – Consumer Price Index (09:00 UTC).
• European Union – Speech by ECB President Christine Lagarde (10:50 UTC).
• United States – Retail Sales (12:30 UTC).
• United States – FOMC Interest Rate Decision (18:00 UTC).
• United States – Dot Plot Projections (18:00 UTC).
• United States – Federal Reserve Press Conference (18:30 UTC).

The economic calendar for June 17 contains six events, three of which can be considered important. The economic backdrop is expected to influence market sentiment during the final quarter of the trading day.

EUR/USD Forecast and Trading Recommendations:

In my view, the pair remains in the process of forming a bullish trend. The news backdrop shifted sharply in favor of bears three months ago, but the broader trend cannot be considered canceled or completed. Therefore, bulls may well resume their advance in the near future if geopolitical developments continue to support them.

At this stage, traders should wait for the formation of new patterns, preferably bullish ones. I expect such a pattern to emerge this week. It is also extremely important that the agreement between Iran and the United States does not collapse, as otherwise bears may regain the initiative, and the emerging bullish outlook could be prematurely broken—just as the bearish setup was broken last week.