On the 4-hour chart, the EUR/USD wave structure has stayed consistent for several months, which is a positive sign. Even during corrective phases, the overall pattern remains intact, allowing traders to build reliable forecasts. Wave patterns don’t always mirror textbook illustrations, but in this case, the formation looks quite solid.
The upward trend segment is still developing, supported by a macro backdrop that favors currencies outside the U.S. The trade war initiated by Donald Trump continues to weigh on the dollar. His disputes with the Federal Reserve and growing dovish sentiment in the market further pressure the greenback. Trump’s “One Big Law” is projected to push U.S. national debt higher by about $3 trillion, while tariffs keep expanding. Despite second-quarter GDP growth reaching 3%, markets are unimpressed with his first six months in office.
From a wave perspective, it appears that wave 4 has ended, and the formation of impulse wave 5 may already be underway, potentially targeting levels as high as 1.25. There is still a chance that wave 4 could extend into a more complex five-wave correction, but the more probable scenario suggests the bullish structure is intact.
Friday’s modest decline of several dozen basis points in EUR/USD is difficult to interpret. On one hand, the move is too small to invalidate the bullish outlook. On the other, buying momentum remains muted, even though the news backdrop strongly favors the euro. This week alone, Trump escalated trade tensions with India, clashed again with the Fed, and Germany reported a rise in August inflation to 2.2% above expectations. While the increase looks minor, such shifts often signal the beginning of broader trends.
If Eurozone inflation continues to rise, it would present a challenge for the ECB, which has already taken rates back to neutral. Raising rates again seems unlikely, meaning inflation could have more room to run. Still, a clearer picture will only emerge once full Eurozone inflation data for August is released.
Despite these developments, euro demand stalled after Thursday, reflecting ongoing market caution.
Final Thoughts
EUR/USD remains in an upward trend phase, with wave patterns aligning to support further growth. The trajectory is still largely influenced by Trump’s policies and U.S. economic dynamics. Near-term targets include 1.1875 (161.8% Fibonacci), with extended potential toward 1.25.
For now, buying opportunities remain valid under the assumption that wave 4 has finished. However, as always, risk management is essential:
-
Favor simple, clear wave structures over complicated ones.
-
Avoid trading if the market picture is uncertain.
-
No forecast guarantees 100% accuracy—always use Stop Losses.
-
Combine wave analysis with other strategies for stronger signals.
Disclaimer: This analysis is provided for educational purposes only and should not be taken as direct trading advice.
