The EUR/USD pair continues its upward move, which began after two liquidity sweeps marked by red lines on the chart. Imbalance 17 held back the bulls' advance for a long time, but it has now been completely invalidated. Two new imbalances — 20 and 21 — were also formed this week. Both are bullish. Both may generate new buy signals in the future. Unfortunately, the price failed to form a signal before starting another upward move. Nevertheless, it can now be considered that the bearish impulse has ended and that the bulls will be the dominant force going forward.

In my view, the fundamental backdrop continues to fully support the bulls. First, it is clearly visible on any chart that the European currency began its advance from relatively low levels compared with its average price over the past year. Second, the market is no longer expecting FOMC monetary policy tightening in September. Third, the market has begun to doubt whether the Fed under Kevin Warsh will be capable of tightening monetary policy at all. Fourth, U.S. economic data have recently been disappointing across the board. Fifth, geopolitical factors no longer support the bears or the dollar. Sixth, the ECB may implement another round of monetary policy tightening this autumn. Seventh, the U.S. Treasury has decided to increase its purchases of long-term bonds, reducing demand for the dollar. Thus, I see no reason for a bearish advance.

As I warned in recent weeks, if the labor market once again produces a weak result, this will be a sufficiently strong reason for the Fed to refrain from raising rates. Incidentally, the latest decline in the dollar began immediately after the most recent Nonfarm Payrolls report. Initially, the decline was gradual, as if the market were uncertain about its direction. However, bullish pressure has increased with each passing day. Look closely at the chart: since July 28, the price has moved almost exclusively upward, with virtually no corrective pullbacks. The bears are currently extremely weak.

Let me remind you that expectations regarding the Fed's monetary policy are always just expectations and can change in response to geopolitical developments or economic data. The market may anticipate easing or tightening and price these expectations in, as we saw between June 17 and 24. However, this does not mean that these expectations will materialize. The latest U.S. labor market data showed weak figures, inflation slowed, and GDP growth decelerated. These three factors have raised doubts about an FOMC rate hike not only in September but also in the foreseeable future. In my view, the bears' only chance now lies in a new escalation in the Middle East and a prolonged blockade of the Strait of Hormuz. However, Donald Trump is not inclined toward escalation. He now wants to wear Iran down.

The current chart picture points to a highly probable continuation of the bullish impulse. Bearish imbalance 17 has been worked off, the reaction to it was weak, and this pattern is now invalidated. Bullish imbalance 19 remains unworked. The new bullish imbalance 20 also failed to provide traders with a buy signal. Another bullish imbalance 21 has formed. At present, the bulls have much stronger positions and prospects than the bears.

The economic backdrop once again supported the bulls on Friday. Today's data were not the most important, but three of the four business activity indices for Germany and the European Union, excluding the composite indices, came in above traders' expectations. Thus, the euro received some, albeit limited, support even on the final day of the week. And this week turned out to be a very successful one for the euro.

The bulls still have an enormous number of reasons to attack in 2026, and even the outbreak of war in the Middle East has not reduced their number. Structurally and globally, Trump's policies, which led to a significant decline in the dollar last year, have not changed. At present, I see no serious factors supporting the U.S. currency despite the FOMC's formally hawkish stance. Geopolitical factors, which supported demand for the U.S. currency during most of the first half of 2026, can no longer do so. The conflict in the Middle East remains unresolved, but there are currently no new hostilities from either Iran or the United States.

U.S. and EU economic calendar:

On August 24, the economic calendar contains no notable events. The economic backdrop will have no impact on market sentiment on Monday.

EUR/USD Forecast and Trading Advice:

In my view, the pair remains in the process of forming a bullish trend. The fundamental backdrop shifted sharply in favor of the bears six months ago, but the trend cannot be considered canceled or complete. Thus, the bulls may well continue their advance after two liquidity sweeps from clearly defined lows. At present, bullish traders have support in the form of imbalances 20 and 21. A new buy signal has not yet formed (unfortunately), but one may form next week. I see 1.1797 and 1.1850 as upward targets for the European currency.