The EUR/USD pair reversed in favor of the euro and began a new upward move, although without testing the nearest bullish pattern. The market is becoming increasingly confident that an agreement between Iran and the United States could be reached in the near future. Donald Trump continues to repeat this, while statements from Iran also confirm a commitment to peaceful negotiations. Thus, the words of the U.S. president are at least indirectly supported. Against the backdrop of rising optimism, bulls launched another advance, though still a very cautious one.
Traders understand that the issues being discussed between the U.S. and Iran are so significant that the sides may ultimately fail to reach a final agreement. Therefore, they are not rushing to buy the euro or sell the safe-haven dollar. Nevertheless, the chart structure continues to clearly indicate bullish dominance. Thus, even without a corresponding signal, the euro may continue its upward movement, as I have repeatedly stated over recent months.
In the current situation, traders waiting to open new positions can either wait for imbalance 13 to be tested or for new bullish patterns to emerge. I still consider the trend bullish. Last week, bulls came very close to testing imbalance 13 and receiving a new buy signal. Notably, there are no bearish patterns at all, so there is no clear basis even hypothetically for selling the pair. The previous buy signal from imbalance 12 worked perfectly, with the euro gaining approximately 270 points. Now the market is ready for new signals and another upward move.
I must once again emphasize that the entire rise of the U.S. dollar between January and March was driven solely by geopolitics. As soon as the U.S. and Iran agreed to a ceasefire, the 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 conflict in Iran.
The market often immediately prices in the most pessimistic scenario, attempting to anticipate the most extreme chain of events. Therefore, I believe traders may have already fully priced in the geopolitical conflict in the Middle East. If so, the bears may have retreated for a long time.
The overall chart picture is currently very clear. The bullish advance remains intact, although it requires support. Ideally, that support would come from geopolitics — namely, continued progress in negotiations between Iran and the United States. However, even without such a news backdrop, bulls are still capable of continuing the rally, though it would likely proceed more gradually.
Friday's economic backdrop gave bears an opportunity to recover some of their recent losses. The Nonfarm Payrolls report came in twice as strong as market expectations. In April, 115,000 new jobs were created, while traders had expected only 62,000. The unemployment rate remained unchanged at 4.3%. However, at this stage it can be said that traders ignored even these economic figures. Bulls continue to attack amid growing expectations of a memorandum being signed between Tehran and Washington.
Bulls still have many reasons to remain active in 2026, and even the outbreak of war in the Middle East has not significantly reduced them. Structurally and globally, Trump's policies — which contributed to the sharp decline of the dollar last year — have not changed. In the coming months, the U.S. currency may occasionally strengthen amid investor flight to safety, but that factor would require ongoing escalation in the Middle East conflict. I still do not believe in a bearish trend for EUR/USD. The dollar received temporary support from the market, but what fundamental drivers would allow bears to dominate in the long term?
News Calendar for the U.S. and the Eurozone:
- U.S. – Existing Home Sales (14:00 UTC)
The May 11 economic calendar contains only one event, which cannot be considered important. Therefore, the impact of the news background on market sentiment on Monday is expected to be very limited. The market may be closed for the weekend, but geopolitics does not pause on Saturdays and Sundays.
EUR/USD Forecast and Trading Advice:
In my opinion, the pair remains in the process of forming a bullish trend. The news background changed sharply three months ago, but the trend itself cannot yet be considered canceled or completed. Therefore, bulls may well continue their advance in the near term, unless geopolitics suddenly turns toward another escalation.
Traders had an opportunity to open long positions based on the signal from imbalance 12, and the upward move may continue toward this year's highs. Imbalance 13 has also formed and may provide another bullish signal in the near future. For the euro to continue rising freely, the Middle East conflict must move toward a lasting peace, and some signs of de-escalation are already beginning to appear. Bullish traders still lack sufficient support for a new impulse move, but they may continue the advance even without it.
