17.12.202511:48 Forex Analysis & Reviews: EUR/USD. "Smart Money". The Bulls Are Disappointed, but They Are Attacking

The EUR/USD pair resumed its upward movement after last week's FOMC meeting. By now, everyone is familiar with the meeting's outcome, the decisions taken, and the statements made. Let me remind you that in recent weeks I had been expecting a resumption of growth in the European currency, and for several consecutive weeks now the euro has been rising. Traders can still remain in long positions, and profits are increasing day by day. Moreover, at the end of last week a new bullish imbalance was formed, from which new buy trades may be opened in the future. Of course, not at the most favorable prices, since the best prices were located at imbalances 3 and 8. Nevertheless, this provides an opportunity to join the trend for those who missed the earlier signals.

The chart picture continues to signal bullish dominance. The bullish trend remains intact; a reaction from bullish imbalance 3 has been received, and a reaction from bullish imbalance 8 has also been observed. Despite the fairly prolonged decline in the European currency, the dollar failed to break the bullish trend. It had five months to do so and achieved no result. Last week, a new bullish imbalance 9 was formed, which now serves as another area of interest and a support zone for the bulls. I would also like to remind once again that if bearish patterns appear or signs of a breakdown of the bullish trend emerge, the strategy can be adjusted. At the present moment, however, nothing points to this.

The news background on Tuesday was fairly strong, but in the first half of the day it did not support bullish traders. In the morning, business activity indices were released in the European Union, and most of them turned out weaker than market expectations. Nevertheless, the bulls are not retreating and continue to attack. Ahead are the U.S. Nonfarm Payrolls and the unemployment rate, which could trigger a strong market reaction in either direction.

The bulls have had plenty of reasons for a renewed advance for two months already, and all of them remain relevant. These include the dovish (in any case) outlook for FOMC monetary policy; the general policy of Donald Trump (which has not changed recently); the confrontation between the U.S. and China (where only a temporary truce has been reached); protests against Trump (which have already swept across America three times this year); weakness in the labor market; bleak prospects for the U.S. economy (recession); and the government shutdown (which lasted a month and a half but was clearly not fully priced in by traders). Thus, further growth of the pair, in my view, will be entirely natural.

One should also not lose sight of Trump's trade war and his pressure on the FOMC. Recently, new tariffs have been introduced infrequently, and Trump himself has stopped criticizing the Federal Reserve. Personally, however, I believe this is yet another "temporary calm." In recent months, the FOMC has been easing monetary policy, which is why we have not seen a new wave of criticism from Trump. However, this does not mean that these factors no longer pose problems for the dollar.

I still do not believe in a bearish trend. The information background remains extremely difficult to interpret in favor of the dollar, which is why I do not attempt to do so. The blue line marks the price level below which the bullish trend could be considered finished. To reach it, the bears would need to push prices down about 360 points, yet they have failed to cover a much smaller distance over the past several months. The nearest upward target for the European currency remains the bearish imbalance zone of 1.1976–1.2092 on the weekly chart, which was formed back in June 2021.

News Calendar for the U.S. and the Eurozone

• Eurozone – German Business Climate Index (09:00 UTC).
• Eurozone – Consumer Price Index (10:00 UTC).

On December 17, the economic calendar contains only two entries, neither of which can be considered important. The impact of the news background on market sentiment on Wednesday will be very weak or nonexistent.

EUR/USD Forecast and Trading Advice

In my view, the pair may be in the final stage of the bullish trend. Despite the fact that the information background remains on the bulls' side, bears have attacked more frequently in recent months. Nevertheless, I currently see no realistic reasons for the start of a bearish trend.

From imbalances 1, 2, 4, and 5, traders had opportunities to buy the euro. In all cases, we saw a certain degree of growth. Opportunities to open new trend-following long positions arose when a reaction to bullish imbalance 3 was received, as well as after the reaction to imbalance 8. The upside target for the euro remains the 1.1976 level. Long positions can be kept open, with stop losses moved to breakeven. A new bullish imbalance 9 has also been formed, which may serve as a basis for opening new long trades in the future.