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EUR/USD Extends Losses as USD Strengthens, Bearish Impulse Focus

The EUR/USD pair has extended its decline for a third consecutive day, falling in line with our previous forecast. The US Dollar (USD) has gained traction, supported by a risk-off market sentiment and recent comments from Federal Reserve (Fed) Chair Jerome Powell. On Monday, Powell downplayed expectations of a significant 50 basis points (bps) rate cut, indicating that the central bank is not in a hurry to lower rates aggressively. His cautious tone has further bolstered the Dollar, keeping pressure on the Euro.

From a broader perspective, the main scenario for EUR/USD remains unchanged from what was outlined in previous analyses. We are still looking for a potential new bearish impulse, particularly as markets anticipate the release of the ADP Non-Farm Employment Change report later today. This key economic indicator could further influence the pair’s movement, with stronger-than-expected data likely boosting the USD and pushing the EUR/USD lower.

Technically, the pair is approaching our second take profit target as the bearish momentum continues. The current outlook suggests further downside potential, especially if today’s ADP report supports the case for a resilient US labor market, reinforcing the strength of the USD.

In conclusion, with the EUR/USD pair continuing its downward trend and the USD benefiting from Powell’s cautious stance, we anticipate further bearish action. The release of the ADP Non-Farm Employment Change report today could provide the catalyst needed to reach our second take profit target. Traders should remain vigilant, as the bearish scenario is still in play and could gain momentum following today’s data.

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