EUR/USD made another reversal in favor of the euro late last week after sweeping liquidity below the previous low. Thus, there were technical grounds for some appreciation of the European currency, and the expectation remains that the bulls will launch a full-scale advance. The bears have been on the offensive for too long and with virtually no opposition, in my view, while the news background has not been so one-sided in recent months as to justify a sustained rise in the dollar alone. The euro deserves at least a corrective pullback. It also has an obvious target: Imbalance 24, from which the bearish impulse could resume, potentially generating a new sell signal.

The U.S. congressional elections will take place tomorrow, an event the market has been eagerly anticipating in recent weeks. The U.S. dollar can be said to be weakening ahead of the elections, which also seems entirely logical. Donald Trump's ruling party is likely to lose the elections, potentially bringing some changes to the U.S. political course. Most experts believe that Trump will continue making decisions largely on his own, while Democrats will spend the next two years opposing virtually every presidential decision. As a result, many critical decisions, such as those concerning the budget, could face significant delays.

It is also worth remembering that the Federal Reserve's stance is not as hawkish as many believe. At the latest meeting, only two FOMC members voted for tighter policy, while the Fed itself adopted a neutral decision that did not imply sustained dollar dominance over the euro in recent weeks. The U.S. economy grew more strongly than expected in the third quarter, but this alone does not justify a two-month rally in the dollar. The ECB also left interest rates unchanged and is expected to raise them in December, just as the Fed is. The economic conditions facing the euro and the dollar are currently almost identical.

At present, there are no signs that the bearish advance is coming to an end. Imbalance 24 remains valid, and the price could react to it, potentially generating a sell signal. The bears have gone too far, and stopping them now will not be easy. The bulls, meanwhile, need to invalidate Imbalance 24 and form bullish patterns before any meaningful appreciation can be expected. This would require a sharp upward move in the euro, but so far the bulls have demonstrated only weakness.

In September, the FOMC raised interest rates and signaled its readiness to begin tightening monetary policy. This proved sufficient to trigger a large-scale bearish advance that continues to this day. However, even after the Fed's monetary policy tightening in September and the possibility of further tightening in December, it is difficult to argue that the euro has received no positive news whatsoever during this period.

Overall, the news background continues to favor the bulls, in my view. Despite the Fed's more hawkish monetary policy stance, this is not the only factor determining exchange rates. The European Union also faces problems, but that is precisely the point: problems exist everywhere, yet only the euro is declining. Both central banks are tightening monetary policy, but only the dollar is rising. Nevertheless, waiting for bullish signals before expecting the euro to appreciate is advisable. Buying the European currency in advance is not recommended either.

The current chart structure points to the uninterrupted continuation of the bearish impulse. The only relevant pattern at present is Imbalance 24, which could be revisited in the near future. The bulls' only current opportunity lies in liquidity sweeps below obvious swing lows. However, opening long positions requires more evidence than a liquidity sweep alone.

Monday's economic data did not trigger an appreciation of the euro. It is possible that Donald Trump put pressure on the dollar by deciding once again to resume negotiations with Iran. Alternatively, the prospect of a Republican defeat in the elections may be weighing on the U.S. currency. In any case, the week's most important events are still ahead.

The bulls still have numerous reasons to launch an advance in 2026. Structurally and globally, Trump's policies—which led to a substantial decline in the dollar last year—have not changed. At present, there are no major factors providing support for the U.S. currency, despite the FOMC's hawkish stance. Geopolitical developments and the tense situation in Europe are currently working against the euro.

Economic calendar for the United States and the European Union:

• United States – JOLTS Job Openings (15:00 UTC).
• United States – Congressional elections.

The economic calendar for November 3 contains two entries, but the results of the congressional elections are likely to become known on Wednesday night. The impact of the economic data on market sentiment on Tuesday may be limited.

EUR/USD Forecast and Trading Recommendations:

In my view, the pair remains in the process of forming a bullish trend that has been in a corrective phase for an entire year. The news background shifted sharply in favor of the bears eight months ago, but the trend, which has been in place for four years, cannot yet be considered invalidated or complete. The bulls may resume their advance before the end of the year. However, their current opportunities are limited to the low of 1.1066, recorded in June last year, and the low of 1.1114, recorded several weeks ago. Liquidity could be swept below either of these levels. A new sell signal could also form within Imbalance 24.