The EUR/USD pair has been declining for the ninth consecutive day, and such steady daily losses inevitably raise the question: what is behind this sharp shift in market sentiment? In my view, there is no clear-cut answer. Traders can only speculate as to why the U.S. dollar has been strengthening for a week and a half, ignoring chart patterns and many economic developments.

Recall that just last week, the annual Nonfarm Payrolls report and inflation data pointed more toward a dollar decline than a rise. This week, not all economic data allowed bears to attack confidently. Yesterday, there were no significant reports at all, and today, nearly all European reports showed fairly solid readings — yet even these failed to prompt bulls to go on the offensive. Therefore, I conclude that the market is currently not reacting to economic data and is fully focused on the "Iranian conflict."

The last bullish imbalance 12 could have been invalidated as early as yesterday, but this has not happened so far. We have not seen a second reaction to this pattern, so there are still no grounds for opening new long positions. In general, there remains the option of taking liquidity from the February 6 low, but such signals are usually difficult to trade.

The chart structure continues to signal bullish dominance. The bullish trend remains intact. At the moment, the pair is close to setting aside the bullish scenario for a while, but imbalance 12 has not yet been invalidated. In any case, there are currently no bearish patterns from which traders could open short positions. And as already mentioned, the trend is bullish.

On Friday, the news background provided bulls with a fully justified opportunity to move into attack mode. Business activity indices in Germany's services and manufacturing sectors, as well as in the Eurozone as a whole, exceeded traders' expectations. However, traders chose not to act on the euro-positive statistics, which further convinces me that the dollar's rise is rooted in the Iran factor.

Bulls have had sufficient reasons for a new offensive for the past 6–7 months, and with each passing week, those reasons have at least not diminished. These include the (in any case) dovish outlook for FOMC monetary policy, Donald Trump's overall policies (which have not changed recently), the U.S.–China confrontation (where only a temporary truce has been reached), public protests in the U.S. against Trump under the slogan "No Kings," labor market weakness, the autumn government shutdown (which lasted a month and a half), the February shutdown, U.S. military actions against certain countries, criminal proceedings against Powell, the "Greenland confusion," and strained relations with Canada and South Korea. Therefore, in my view, further growth of the pair would be entirely logical.

I still do not believe in a bearish trend. The news background remains extremely difficult to interpret in favor of the dollar, so I am not trying to do so. The blue line marks the price level below which the bullish trend could be considered complete. Bears would need to push the price down about 280 points to reach it — which still appears to be a very challenging task given the current news background and chart structure, where not a single bearish pattern is present.

The nearest upward target for the euro was the bearish imbalance at 1.1976–1.2092 on the weekly chart, formed back in June 2021. This pattern has now been fully filled. Above it, two levels can be highlighted: 1.2348 and 1.2564 — both representing peaks on the monthly chart.

News Calendar for the U.S. and the Eurozone:

Eurozone – German Business Climate Index (09:00 UTC).

On February 23, the economic calendar contains only one secondary entry. The impact of the news background on market sentiment on Monday may be extremely limited.

EUR/USD Forecast and Trading Advice:

In my view, the pair remains in the process of forming a bullish trend. Despite the news background favoring bulls, bears have repeatedly launched attacks in recent months. However, I do not see realistic reasons for the start of a bearish trend.

From imbalances 1, 2, 4, 5, 3, 8, and 9, traders had opportunities to buy the euro. In all cases, we saw some growth, and the bullish trend remains intact. Over the past week, the price movement has not been what we would have preferred, but through liquidity taking within imbalance 12, a bullish signal with renewed upward momentum may still form.