EUR/USD. Smart Money. Trump Is Preparing to Attack Iran, the Market Doesn't Care

[Ben Graham]

The EUR/USD pair continues to trade while ignoring both the news background and the technical picture. I expected—and still expect—a reaction to Imbalance 9, but after eight days of waiting I am closer to the conclusion that the price simply does not "see" this pattern rather than that a new bullish impulse is being prepared. Over the past 15–20 days, the pair has covered roughly 180 points. And this was a steady move in the same direction every single day. This means that, on average, the pair has been declining by about 10 points per day. Such strength of movement and the corresponding trader activity completely neutralize the impact of both the news background and the chart setup.

The dollar began to fall on Monday's events but almost immediately ended that move. I continue to wait for a bullish reaction to Imbalance 9 until the invalidation of this pattern forces the conclusion that the bullish impulse has been canceled. However, at the moment there is neither a reaction nor an invalidation, nor any meaningful movement at all. There is a news background, but there is no price movement. Invalidation would occur below the 1.1616 level, but even this task currently seems beyond traders' capabilities, and speaking about bulls or bears having the initiative over the past few weeks is simply impossible.

The technical picture continues to signal bullish dominance. The bullish trend remains in place, but it is merely being maintained, not developed. A new bullish signal can only be formed within Imbalance 9, but so far it has not appeared. If bearish patterns emerge or bullish ones are invalidated, the trading strategy will have to be adjusted. However, at the present time none of this is happening. There are no new patterns at all, as market movements are extremely weak.

The news background on Wednesday was fairly weak. Donald Trump is preparing to attack Iran in order to accelerate a coup that has been ongoing for several weeks, yet the market is not reacting even to this event. Earlier, we saw a weak reaction to inflation, unemployment, and labor market reports. At the same time, there was a weak reaction to the arrest of Nicolas Maduro and to the official charges against Jerome Powell. If such events do not create a desire to trade, all that remains is to wait.

Bulls have had plenty of reasons for a new offensive for the past 4–5 months, and all of them remain relevant. These include the dovish (in any case) outlook for FOMC monetary policy, Donald Trump's overall policy (which has not changed recently), the confrontation between the U.S. and China (where only a temporary truce has been reached), protests by the American public against Trump under the "No Kings" banner, weakness in the labor market, bleak prospects for the U.S. economy (recession), and the government shutdown (which lasted a month and a half but was clearly not priced in by traders). Now, on top of that, there is U.S. military aggression toward certain countries and the criminal prosecution of Powell. Thus, 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, which is why I do not even try to do so. The blue line marks the price level below which the bullish trend could be considered over. Bears would need to push the price down by about 300 points to reach it, and I consider this task impossible under the current news background and circumstances. The nearest upward target for the European currency remains the bearish imbalance at 1.1976–1.2092 on the weekly chart, which was formed back in June 2021.

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

• Eurozone – Final German GDP for 2025 (09:00 UTC)
• Eurozone – Change in industrial production (10:00 UTC)
• U.S. – Initial jobless claims (13:30 UTC)
• U.S. – Philadelphia Fed Business Outlook Index (13:30 UTC)

The economic calendar for January 15 contains four entries, of which only German GDP is of interest. The impact of the news background on market sentiment on Thursday will be weak.

EUR/USD Forecast and Trading Advice:

In my view, the pair may be approaching the final stage of the bullish trend. Despite the fact that the news background remains on the side of the bulls, bears have attacked more frequently in recent months. Nevertheless, I see no realistic reasons for the start of a bearish trend.

From Imbalances 1, 2, 4, and 5, traders had opportunities to buy the euro. In all cases, we saw some degree of growth. Opportunities to open new trend-following long positions appeared when a reaction to bullish Imbalance 3 was received, then after the reaction to Imbalance 8, and later after a rebound from Imbalance 9. This week, a second reaction to bullish Imbalance 9 may still occur. The upside target for the euro remains 1.1976. New long positions are acceptable if a new bullish signal is formed. If not, the long strategy will have to be reconsidered.

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