We use cookies that are necessary for this site to work. With your permission we would also use analytics and advertising cookies to understand how the site is used and to measure our advertising. Cookie Policy
A bear market is a sustained period of declining prices, typically defined as a drop of 20% or more from recent highs. In forex, the term is applied more loosely to describe a currency or asset in a prolonged downtrend. Bear markets are driven by pessimistic sentiment, weakening economic data, or risk-off conditions. Traders can profit in bear markets by selling (going short).
If EUR/USD falls steadily from 1.1200 to 1.0600 over three months due to deteriorating eurozone economic data, that is a fall of about 5%. That is far short of the 20% equity-market definition, but forex traders often still call a sustained decline like this a bear market for the euro. Short sellers profit from this decline.
