13.10.202619:41 Forex-elemzések és áttekintések: EUR/USD – Smart Money Analysis: The Fed Continues to Tighten Monetary Policy

The EUR/USD pair has been declining for 24 consecutive days, apart from a few brief pauses. During this period, the euro has lost 500 points, and its losing streak began more than a month ago, as the market started preparing for an FOMC rate hike. Since then, market participants have continued buying the US dollar, using any pretext to justify these purchases. In trading terminology, such movements are known as order flow. Typically, large market participants build up a pool of orders within a range for some time, after which these orders begin to be executed. At that point, the prevailing news backdrop becomes largely irrelevant: the orders have already been placed and are being filled. For example, last week, traders had virtually no reason to sell EUR/USD, apart from the ordinary issue of France's budget crisis. Nevertheless, the euro continued to decline. The new week had barely begun when bears resumed their attacks, even though no significant news had yet reached the market. However, overnight, FOMC member Beth Hammack stated that interest rates should be raised at a faster pace, without pauses, giving traders another reason to buy the US dollar. It does not matter that virtually all other FOMC members are prepared to vote for no more than one additional policy tightening before the end of the year. It does not matter that the Fed has raised rates only once. The US dollar continues to rise as if the Fed were increasing interest rates every day.

So far, nothing has been able to stop the euro's decline. The ECB's monetary policy tightening, favorable economic data from the European Union, disappointing US labor market figures, and bullish chart patterns have all failed to reverse the trend. With Imbalance 19 invalidated, the euro now has a clear path toward the psychological $1.10 level. The bullish Imbalance 19 has turned into a bearish inverted imbalance, generating a sell signal. Bulls failed to capitalize on two bullish swings and were unable to take advantage of disappointing US labor market data. Bears resumed their advance without even waiting for Imbalance 24 to be mitigated.

In September, the FOMC not only raised interest rates but also signaled its willingness to continue tightening monetary policy. This was enough to sustain the bears' large-scale advance. Even after the Fed's monetary policy tightening in September and the possibility of further tightening in October or December, I do not believe that the euro has gone through this entire period without receiving a single piece of positive news.

Overall, in my view, the news backdrop continues to favor the bulls. Despite the Fed's increasingly hawkish monetary policy stance, this is not the only factor determining exchange rates. It is worth remembering that US Treasury yields are reaching record highs, placing enormous pressure on the federal budget; the US economy has slowed in recent quarters; the US labor market has disappointed more often than it has pleased; Donald Trump resumed a wave of trade and non-trade disputes with numerous countries in 2026; and the US stock market continues to raise serious concerns because of uncontrolled, debt-financed investments in technology companies involved in AI development. The European Union also has its problems, but that is precisely the point: problems exist everywhere, yet only the euro is falling.

The current chart structure points unequivocally to the continuation of bearish momentum. The only relevant pattern at present is Imbalance 24, which is unlikely to be mitigated anytime soon, as the bears do not even need a pause. The bulls' only remaining opportunity is to sweep the liquidity below the June low of 1.1066. However, the probability of this happening is extremely low.

There was virtually no significant economic news on Tuesday. Germany released its final September inflation figures in the morning, while the US existing home sales report was published in the second half of the day. However, everyone understands that reports of this caliber are currently having no impact on the pair's exchange rate.

The bulls still have numerous reasons to launch an attack in 2026. Structurally and globally, Trump's policies—which led to a substantial decline in the US dollar last year—have not changed. At present, I see no significant factors supporting the US currency, despite the FOMC's hawkish stance. Geopolitical developments, which supported demand for the US dollar during most of the first half of 2026, are no longer doing so.

US and European Union Economic Calendar:

• European Union — Speech by ECB President Christine Lagarde (02:00–10:00 UTC).
• European Union — Speech by ECB President Christine Lagarde (08:30 UTC).
• United States — Consumer Price Index (12:30 UTC).

The economic calendar for October 14 contains three events, among which the inflation report is particularly noteworthy. Economic data may influence market sentiment on Wednesday afternoon.

EUR/USD Forecast and Trading Recommendations:

In my view, the pair remains in the process of forming a bullish trend that has been taking a corrective pause for an entire year. The news backdrop shifted sharply in favor of the bears seven months ago, but the trend itself, which has been in place for four years, cannot yet be considered invalidated or complete. The bulls may resume their advance before the end of the year, but their only realistic opportunity at present is the low of 1.1066, established in June last year. The bears received a new sell signal from Imbalance 19. At this point, short positions should simply be kept open. The bears are so confident in their position that they did not even need price to rebalance within Imbalance 24. The bulls have little left to do but hope for a miracle.