15.07.202618:16 Forex-elemzések és áttekintések: EUR/USD – Smart Money Analysis: Kevin Warsh Did Not Support Further Euro Gains

The EUR/USD pair remains within a local bearish impulse. However, over the past two weeks, bulls have managed to push bears back slightly. The euro's gains have been modest, but that is still preferable to another decline. The bulls have made their move, while the pair's near-term outlook—at least for this week—will depend on geopolitical developments, inflation, and Kevin Warsh's stance. We can already draw certain conclusions regarding two of these three factors.

Yesterday, it became known that U.S. inflation slowed to 3.5% year-on-year, rather than the 3.8% expected by the market, significantly reducing the likelihood of further FOMC monetary policy tightening. I do not believe this means the Federal Reserve will abandon the idea of raising interest rates, but inflation still slowed by a substantial 0.7 percentage points in a single month. Yesterday also saw Federal Reserve Chairman Kevin Warsh testify before Congress. As expected, his rhetoric remained largely unchanged from the Fed's press conference a month earlier, as he again emphasized the problem of persistently high inflation. However, the market had expected more hawkish comments and did not receive them. As a result, the U.S. dollar has found little support this week, although it has not been in a hurry to decline either. In my view, the situation remains rather unusual. The dollar either strengthens or simply refuses to weaken regardless of the news.

It is also worth recalling that the latest U.S. labor market data came in relatively weak. Job creation remains subdued. Over the past three months, the number of new jobs has been approximately 100,000 lower than traders had expected. As a result, slowing labor market conditions and easing inflation are forcing the FOMC to weigh any decision on monetary policy tightening much more carefully.

Geopolitical developments have moved into the background as the market focuses on the Federal Reserve. Last week, Tehran and Washington once again violated the ceasefire and the June 17 agreement, but this came as no surprise to traders. Donald Trump signed an executive order revoking authorization for Iranian oil exports, while Iran once again closed the Strait of Hormuz and has been attacking vessels attempting to pass through it. The market barely reacted when the conflict subsided, so it is unlikely to react strongly to its renewed escalation. We did not see the expected decline in the U.S. dollar following the easing of geopolitical tensions, nor did we see the euro strengthen after the ECB tightened monetary policy. Bears remain in control despite the current fundamental and geopolitical backdrop. At present, renewed geopolitical tensions once again provide formal grounds for bearish attacks. However, in my opinion, traders are pricing in geopolitical developments for the third time, including events that have not yet actually occurred.

The current technical picture continues to point to the bearish impulse that began on April 17. Bearish imbalance 17 has not yet been mitigated, while imbalance 18 has been invalidated following weak U.S. labor market data. No bullish patterns have formed, and none are likely to appear in the coming days given the market's lack of direction. Therefore, bulls may continue a corrective advance toward imbalance 17, but there is currently no clear technical basis for trading such a move. I would also note that liquidity has been swept below last year's August 1 low (marked by the red line on the chart). At present, this remains the bulls' only meaningful technical argument.

Wednesday's economic calendar offered little support for either side. Kevin Warsh's second day of congressional testimony differed little from the first, Eurozone industrial production data came in weak, and the U.S. Producer Price Index failed to outweigh the impact of the previous day's inflation report. As a result, bulls received no new reasons to advance, while also proving unable to capitalize on the factors already working in their favor.

The bulls still have numerous reasons to launch a broader advance in 2026, and even the conflict in the Middle East has not materially changed that picture. Structurally and fundamentally, Trump's policies—which contributed to the sharp decline in the U.S. dollar last year—have not changed. At present, I see no strong long-term support for the U.S. dollar despite the FOMC's hawkish stance. EUR/USD is now approaching a series of significant lows and swing points where liquidity may be swept, potentially providing a signal for a reversal of the current bearish impulse.

News Calendar for the United States and the Eurozone:

United States

• Retail Sales (12:30 UTC)
• Initial Jobless Claims (12:30 UTC)

The economic calendar for July 16 contains two scheduled events, neither of which I consider particularly important. Therefore, macroeconomic releases are likely to have only a limited impact on market sentiment during the second half of Thursday.

EUR/USD Forecast and Trading Tips:

In my view, the pair remains in the process of forming a bullish trend. Although the fundamental backdrop shifted sharply in favor of the bears four months ago, the broader trend cannot yet be considered invalidated or complete. Therefore, bulls may launch another advance after liquidity is swept below well-defined lows. However, opening long positions at the current stage is not advisable. It is preferable to wait for bullish technical patterns to form first.

At present, traders have two bearish imbalances at their disposal, one of which has already been invalidated. I would also draw attention to the proximity of four significant swing points where liquidity has already been swept, as well as the questionable fundamental basis for the U.S. dollar's strength. Therefore, I continue to expect a bullish advance, but it is important to obtain at least some technical confirmation of this scenario. Alternatively, traders can wait for a new sell signal to form within imbalance 17.