The EUR/USD pair declined for five consecutive days, even though neither the ECB nor the Fed had held its meeting yet. It is worth recalling that the previous bearish advance lasted a full 25 trading days, during which the euro lost almost six cents in value. The same pattern now appears to be repeating. Nothing particularly damaging to the European currency has happened this week so far, yet traders have once again rushed to sell the euro to avoid potential risks.

There are, of course, reasons for this behavior, as usual. Over the weekend, new large-scale protests against the rising cost of living took place in several European countries, accompanied by vandalism and unrest. In a couple of hours, the FOMC decision will be announced, and most traders expect a hawkish outcome. Immediately after the US congressional elections, on November 4, Donald Trump may order the resumption of military operations against Iran. Traders are once again interpreting these three factors in a straightforward way: moving away from risk and seeking the safety of the US dollar. This is the only way to explain the dollar's renewed appreciation. Can the market be considered right? Probably. Is the market selectively weighing the available information? Also yes. Uncertainty is now exceptionally high—not only in France and Italy, the Middle East, and Ukraine, but even in the foreign exchange market. Markets dislike uncertainty, and capital does not favor confidence in a predictable future.

It is worth noting that the Fed's current stance is not particularly hawkish. Over the past two weeks, no FOMC member has expressed support for monetary policy tightening in October. Therefore, the Fed is almost certain to leave interest rates unchanged today. No economic justification for further dollar appreciation is apparent. The ECB will also hold a meeting and may likewise leave interest rates unchanged. Yet the euro has been declining for more than a month and continues to fall.

At present, there are no clear signs that the bearish advance is coming to an end. Imbalance 24 remains active, and the price may react to it, forming a new sell signal. The bears have advanced too far, making their momentum difficult to stop. The bulls, meanwhile, need to invalidate Imbalance 24 and form bullish patterns before any meaningful recovery can be expected. This would require a sharp upward move in the euro, but so far, the bulls have demonstrated little more than weakness.

In September, the FOMC raised interest rates and signaled its readiness to continue tightening monetary policy. That was enough to trigger a large-scale bearish advance. However, even after the Fed's September tightening and the possibility of another rate increase in December, it would be incorrect to conclude that the euro has received no positive news during this period. The market is simply ignoring much of it.

Overall, the fundamental backdrop still appears to favor the bulls. Although the Fed has adopted a tighter monetary policy stance, this is not the only factor determining exchange rates. The European Union also faces problems, but the key point is that problems exist everywhere, while only the euro continues to decline. Both central banks are tightening monetary policy, yet only the dollar is appreciating. Nevertheless, a recovery in the euro should not be expected until bullish signals emerge. Buying the European currency in advance is also inadvisable.

The current chart structure points unequivocally to the continuation of bearish momentum. Imbalance 24 is the only active pattern of note and may be tested in the near future. The bulls' only immediate opportunity lies in a liquidity sweep below the 1.1066 low. However, opening long positions requires more confirmation than a liquidity sweep alone.

There was no significant economic news on Wednesday, and traders became somewhat calmer ahead of the Fed meeting. The FOMC decision will be announced in a couple of hours, although there is little uncertainty about the likely outcome. The market is waiting for Kevin Warsh's remarks.

The bulls still have numerous reasons to resume their advance in 2026. Structurally and fundamentally, Trump's policies—which contributed to the dollar's substantial decline last year—have not changed. At present, there are no significant factors supporting the US currency, despite the FOMC's hawkish stance. Geopolitical developments and the tense situation in Europe are currently weighing on the euro.

Economic Calendar for the US and the European Union:

• United States — Advance estimate of third-quarter GDP growth (12:30 UTC).
• United States — Core PCE price index (12:30 UTC).
• United States — Personal income and spending (12:30 UTC).
• United States — Change in initial jobless claims (12:30 UTC).
• European Union — ECB interest rate decision (13:15 UTC).
• European Union — Press conference with Christine Lagarde (13:45 UTC).

On October 29, the economic calendar contains six releases, with the ECB meeting and the GDP report standing out as the most significant. Economic data could have a substantial impact on market sentiment on Thursday.

EUR/USD Forecast and Trading Tips:

In the long term, the pair still appears to be in the process of forming a bullish trend that has been in a corrective phase for an entire year. The fundamental backdrop shifted sharply in favor of the bears eight months ago, but the broader trend, which has been in place for four years, cannot yet be considered invalidated or complete.

The bulls could resume their advance before the end of the year, but their current opportunities are limited to the low of 1.1066 established in June last year and the low of 1.1114 recorded several weeks ago. The bears received a sell signal at Imbalance 19. At present, existing short positions should remain open. Another sell signal may form at Imbalance 24.