After falling below the last structural low and taking out two areas of bearish liquidity, the EUR/USD pair reversed in favor of the euro and began a fairly strong upward move. Thus, at the moment, we can speak of liquidity being taken from the swing of November 5. However, a rise of 120–130 points does not yet indicate the end of the bearish move or the start of a new bullish trend. Formally, the bullish trend was broken when the price fell below the 1.1465 level. However, I previously warned that the pair could take liquidity from two obvious lows, in which case the bullish trend would not only remain intact but also resume. Therefore, everything now depends on geopolitics, the Fed, and imbalance 12.

If the price reacts to imbalance 12, a new bearish signal will form, which—given the break of the bullish trend—would imply a decline in the euro well below the 1.1400 level. I would only consider this scenario likely if geopolitics continues to strongly support the bears. As mentioned earlier, this would require not just continued tension in the Middle East, but a worsening situation. Oil prices would need to keep rising, more countries would need to join the conflict, and developed economies would have to suffer significantly. The conflict itself would also need to drag on for many months. Yesterday, I noted that there were no clear prerequisites for such a scenario, but negative news from the Middle East continues, oil prices are rising, and countries are beginning to tap into strategic reserves of oil and gas. Therefore, a continued decline in EUR/USD is no longer an unlikely scenario.

The key pattern for this week remains the bearish imbalance 12, which could provide traders with another sell signal. At the moment, everything is pointing toward such a signal forming. However, this can only be confirmed after the daily candle closes, and the Fed meeting could trigger any kind of market movement. Therefore, I will refrain from drawing firm conclusions for now. Bulls, in the current situation, can only rely on liquidity grabs at the last two lows: 1.1470 and 1.1392. However, if tensions in the Middle East do not ease and the Fed adopts a hawkish stance today, even that may not help the bulls.

The chart structure still signals bullish dominance. The bullish trend remains in place, but traders on the bullish side are currently in a difficult position due to the rapidly changing news flow. Opening new long positions requires new bullish patterns or at least a liquidity grab of the last two bearish swings. However, a liquidity grab is not a standalone pattern and cannot be used by itself as a trading signal.

The news background on Wednesday again supported the bears, as the U.S. Producer Price Index for February came in significantly above forecasts. This suggests that inflation may accelerate in the near term, which could force the Fed to abandon plans for monetary easing over the next six months to a year.

There are still many reasons for bulls to act, and even the outbreak of war in the Middle East has not reduced them. Structurally and globally, Trump's policies—which led to a significant weakening of the dollar last year—have not changed. In the short term, the U.S. currency may strengthen due to a flight to safety, but this factor cannot support it indefinitely. There are no other strong drivers supporting the dollar.

I still do not believe in a sustained bearish trend. The dollar has received temporary support, but it is unclear how long this will last. However, the bullish trend has been broken, and this must be acknowledged. There is still a chance for a liquidity grab and a resumption of the trend, but geopolitics continues to weigh heavily on EUR/USD.

Economic calendar for the U.S. and the Eurozone:

• U.S. – Initial Jobless Claims (12:30 UTC)
• Eurozone – ECB Interest Rate Decision (13:15 UTC)
• Eurozone – Press Conference by Christine Lagarde (13:45 UTC)
• U.S. – New Home Sales (14:00 UTC)

On March 19, the economic calendar includes four events, two of which are noteworthy. The impact of the news background on market sentiment on Thursday may be present, but is unlikely to be strong.

EUR/USD Forecast and Trading Advice:

In my view, the pair remains in the process of forming a bullish trend. The news flow sharply shifted direction two weeks ago, but the trend itself cannot yet be considered fully invalidated or completed. Therefore, traders need new patterns and signals to form short-term forecasts.

At present, bears may receive a signal from imbalance 12, and since the bullish trend is on the verge of breaking, this signal should be taken seriously. Bulls, on the other hand, can only hope for liquidity grabs at 1.1470 and 1.1392, the invalidation of imbalance 12, the formation of new bullish patterns, and subsequent buy signals.