The EUR/USD pair remains within the local bearish impulse that began on April 17, but with each passing day, the bulls are getting closer to establishing their own trend. To do so, they only need to invalidate bearish imbalance 17, which could happen as early as today. The fundamental backdrop remains unfavorable for the bears. Traders expected Kevin Warsh to either promise a rate hike in September or at least adopt hawkish rhetoric that would clearly answer the question: "Is the Fed preparing to tighten monetary policy in the fall?" Instead, Warsh referred to economic data, which today answered the above question much more clearly than the Fed Chair did. In July, the number of new Nonfarm Payrolls jobs decreased by 23 thousand. In other words, no new jobs were actually created, and total employment decreased. Thus, one of the most important indicators of the US economy has declined for the fourth consecutive month. It is now below zero, while the normal range of values is 100–150K. All of this suggests that traders should not expect the FOMC to tighten monetary policy in September. 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 abandon a rate hike. Of course, it is impossible to say this with certainty at this point, but I am almost certain that policy tightening this year is highly unlikely.

Let me remind you that expectations of Fed monetary policy tightening are currently just expectations, which may change in response to geopolitical developments or economic data. The latest US labor market data showed weak figures, while the inflation report indicated a slowdown. These two factors cast doubt on an FOMC rate hike in the foreseeable future. If Donald Trump is not misleading the markets and the Strait of Hormuz remains open, this will provide another reason for the market to sell the "safe-haven dollar," which will no longer be needed if the conflict is at least partially resolved.

Geopolitics remains a secondary concern for traders, but it continues to affect the economy. Tehran and Washington are still negotiating through intermediaries, if this can even be called negotiations. If the Strait of Hormuz remains open, this will push oil prices lower and cause inflation to slow. In this case, the probability of FOMC monetary policy tightening will become even lower, although it is already low.

The current chart structure points to the continuation of the bearish impulse that began on April 17. Bearish imbalance 17 was mitigated, but the reaction to it was weak. Therefore, this pattern could be invalidated as early as today. A bullish imbalance 19 was also formed last week, allowing the bulls to look to the future with optimism. If imbalance 17 is invalidated while imbalance 19 remains unmitigated, traders will have to wait for new bullish patterns before they can open long positions.

The economic backdrop on Friday made everything clear. Although the US unemployment rate fell to 4.1%, the more important Nonfarm Payrolls figure declined for the fourth consecutive time. This report triggered a sharp retreat by the bears and virtually closed the question of FOMC monetary policy tightening in September. Against the backdrop of weakness in the US labor market, the dollar may continue to decline next week.

There are still a huge number of reasons for the bulls to attack in 2026, and even the 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 do not see any significant factors supporting the US currency, despite the hawkish stance of the FOMC. Nevertheless, the bears are still attacking, while there are no bullish signals.

News Calendar for the US and European Union:

On August 10, the economic events calendar contains no noteworthy releases. The economic backdrop will have no impact on market sentiment on Monday.

EUR/USD Forecast and Trading Tips:

In my view, the pair remains at the stage of forming a bullish trend. The fundamental backdrop shifted sharply in favor of the bears five months ago, but the trend itself cannot be considered canceled or complete. Thus, the bulls may well continue their advance after two liquidity sweeps of clearly defined lows. A sell signal may have formed within imbalance 17, but the reaction was weak, so this pattern will most likely be invalidated. A bullish signal may form within imbalance 19, but the price is moving increasingly farther away from this pattern. Despite the relatively strong rise in the euro, there is currently no clear setup for opening long positions. It is necessary to wait for new bullish patterns to form, for imbalance 19 to be mitigated, or alternatively to trade the British pound.