Bear Market

A bear market describes a sustained period where prices are declining. In forex, since you're always trading one currency against another, a bear market for EUR/USD means the euro is weakening against the dollar. What's bearish for one currency is simultaneously bullish for the other — forex is a zero-sum game in that sense.

Bear markets in currencies can be driven by multiple factors: rising interest rates in the quote currency, weakening economic data in the base currency's country, geopolitical tensions, or shifts in global risk sentiment. The EUR/USD bear trend from mid-2021 through late 2022 was largely driven by the Fed raising rates aggressively while the ECB was slower to respond.

Trading in bear markets requires either short-selling skills or the patience to wait for bullish conditions. Many retail traders struggle with shorting because it feels counterintuitive — you're betting something will go down. But in forex, shorting is mechanically identical to buying; you're just on the other side of the pair.