The wave pattern on the 4-hour chart for EUR/USD has been revised — unfortunately, not for the better. It is still too early to conclude that the upward trend section has ended, but the recent decline in the euro has made it necessary to adjust the wave structure. At this stage, we can see a series of three-wave structures (a-b-c). It is reasonable to assume that they form part of a larger wave 4 within the overall upward trend segment. In this case, wave 4 has taken on an unusually extended form, though the overall integrity of the wave structure remains intact.

The formation of the upward trend continues, and the fundamental background still mostly supports currencies other than the U.S. dollar. The trade war initiated by Donald Trump continues. The president's conflict with the Federal Reserve also continues. Market expectations for a dovish Fed rate stance are growing. The U.S. government shutdown drags on. The labor market continues to cool.

In my view, the upward trend is not yet complete, and its targets extend as high as the 1.25 level. Based on this, the euro may continue to decline for some time — even without any solid reason for doing so (as has been the case over the past three weeks) — but the wave analysis still points to an eventual rise in prices.

The EUR/USD rate barely moved on Wednesday, and volatility remained extremely low. For the third consecutive day, the market has been clearly waiting for the Federal Reserve meeting. Honestly, there isn't much to expect (and we'll discuss the meeting in more detail in other analyses), but surprises are always possible. Immediately after the announcement, Jerome Powell will deliver a speech, but it makes no sense to speculate on the tone of his remarks for now.

Returning to the current situation — during the first three days of this week, the market received only two economic reports. In Germany, the business climate index and consumer confidence index were released. These indicators might be of interest to German traders, but the broader currency market completely ignored these "very important" releases. In the United States, there have been no significant developments so far, apart from the announcement early in the week that China and the U.S. agreed to extend their trade truce. In the near future, the leaders of both countries may hold a face-to-face meeting to discuss details and shake hands — not as a sign of full peace, but rather to confirm a pause in escalation. In my opinion, this is not particularly positive news for the U.S. dollar. However, at the moment, neither buyers nor sellers have a clear advantage.

General Conclusions

Based on my analysis of EUR/USD, I conclude that the pair continues to build an upward wave structure. The market is currently in a pause, but Donald Trump's policies and the Federal Reserve's actions remain significant bearish factors for the U.S. dollar. The targets of the current trend may extend up to the 1.25 level.

At the moment, we are likely observing the formation of corrective wave 4, which has taken on a very complex and prolonged shape. Therefore, in the short term, I still favor long positions. By the end of the year, I expect the euro to rise to around 1.2245, which corresponds to the 200.0% Fibonacci level.

On a smaller scale, the entire upward section of the trend is visible. The wave pattern is non-standard, since the corrective waves vary in size — for example, the larger wave 2 is smaller than the internal wave 2 within wave 3. However, such situations do occur. I would like to remind you that it's best to focus on clear and identifiable structures rather than trying to label every single wave. The current upward pattern looks relatively coherent.

Key Principles of My Analysis

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often change unexpectedly.
2. If you are unsure about the market situation, do not enter it.
3. Absolute certainty about price direction is impossible. Always use Stop Loss orders to protect your positions.
4. Wave analysis can and should be combined with other forms of analysis and trading strategies.