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12.05.2026 08:42 PMThe EUR/USD pair reversed in favor of the euro and began a new upward move. However, at the moment, it can be said that the bulls' attacks look too weak and unconvincing. One or two days of growth are followed by declines of almost the same magnitude. Thus, bulls are advancing very sluggishly and may lose the initiative in the market.
What is causing the weakness among bulls? The answer is straightforward: geopolitics. The problem is that time is passing, the Strait of Hormuz remains closed, global oil supplies are shrinking, and Iran and the United States are making no progress toward resolving the key issues necessary for signing an agreement.
As a result, the market is gradually beginning to lose faith that any agreement between Tehran and Washington is even possible. A new acronym has even emerged — NACHO ("Not A Chance Hormuz Opens"). In other words: there is virtually no chance that the Strait of Hormuz will reopen.
I previously wrote that there were no signs of a near-term agreement between Iran and the US. I also noted that bulls would struggle to sustain attacks under such an informational backdrop. The bullish impulse has not disappeared completely yet, but it is moving in that direction.
In the current situation, traders looking to open new positions can only wait for the formation of fresh bullish patterns. I still consider the trend bullish. Last week, bulls fell just short of fully working through imbalance 13, but a bullish order block with preliminary liquidity removal was formed instead. This pattern was triggered a few days later and provided another buy signal.
At present, there are no bearish patterns whatsoever, meaning there is no basis for selling the pair even hypothetically. The only thing worth noting is the liquidity grab on the sell side, but a liquidity grab alone is not a pattern — and four days have already passed since then without any visible bearish offensive.
I once again have to point out that the entire rise of the US dollar from January through March was driven solely by geopolitics. As soon as the United States and Iran agreed to a ceasefire, bears immediately retreated, and for more than a month now, bulls have dominated the market.
At present, the ceasefire remains fragile, but negotiations continue, and the chances for peace still exist. I have repeatedly said that I do not believe the bullish trend has ended, despite the break below important trend-defining lows and despite the war involving Iran. Markets often price in the most pessimistic scenario immediately, trying to anticipate the most extreme outcome. Therefore, I allow for the possibility that traders have already fully priced in the geopolitical conflict in the Middle East. If that is the case, the bears may have retreated for quite some time.
The overall chart picture is currently crystal clear. The bullish advance remains intact, but it desperately needs support. Ideally, this support would come from geopolitics — meaning Iran and the United States continue moving toward compromise. However, even without such support, bulls are still capable of continuing their advance. It simply will not be rapid.
The economic backdrop on Tuesday once again attracted little interest from traders. Active trading began in the morning before the US inflation report was even released. The morning economic sentiment indices in Europe went completely unnoticed by the market. Meanwhile, the US Consumer Price Index gave no reason to believe that the Federal Reserve System would move toward monetary tightening anytime soon, which could have supported the dollar.
Bulls still have many reasons to stay active in 2026, and even the outbreak of conflict in the Middle East has not reduced them. Structurally and globally, the policies of Donald Trump — which contributed to the sharp decline of the dollar last year — have not changed.
In the coming months, the US currency may occasionally strengthen amid investor flight from risk, but that factor requires constant escalation in the Middle East conflict. I still do not believe in a sustained bearish trend for EUR/USD. The dollar has received temporary support from the market, but what exactly would allow bears to dominate over the long term?
The May 13 economic calendar contains four events, though none are likely to capture major market attention. The impact of the news background on market sentiment on Wednesday is expected to remain weak.
In my view, the pair remains in the process of forming a bullish trend. The information backdrop changed sharply three months ago, but the trend itself cannot yet be considered canceled or completed.
Thus, bulls may continue their offensive in the near future, provided geopolitics does not suddenly shift toward renewed escalation.
Traders previously had opportunities to open long positions based on the signal from imbalance 12, as well as from the order block signal. The upward movement may continue toward this year's highs.
For the euro to rise without obstacles, the conflict in the Middle East must move toward lasting peace, and signs of de-escalation do occasionally appear. For now, however, bullish traders still lack sufficient support for a new impulse move, which is why the advance remains slow and difficult.
