The wave pattern on the 4-hour chart for EUR/USD has transformed and, unfortunately, not for the better. There is no talk of cancelling the upward trend segment that began in January 2025, but the wave structure has become significantly more complex since July 1 and has taken on a more extended form. In my view, the pair is currently in the process of forming corrective wave 4, which has taken on a non-standard shape. However, the latest five-wave corrective structure suggests that the decline may be ending at this stage.

The formation of the upward trend segment continues, and the news background mostly supports anything but the dollar. The trade war initiated by Donald Trump continues. The President's confrontation with the Federal Reserve may reach a new level in 2026. The market's "dovish" expectations regarding Fed policy remain strong, especially for next year. The labor market is "cooling," but there is no official data. I believe the latest strengthening of the dollar is somewhat paradoxical. But paradoxes do occur in the markets.

In my opinion, the upward trend segment is not yet complete, and its targets extend up to the 1.25 level. The sequence of waves a-b-c-d-e appears complete; therefore, I expect the instrument to rise in any case.

The EUR/USD exchange rate barely changed throughout Friday. The entire week was marked by euro buying, though the buying was very restrained. If we assume that corrective wave 4 is complete, then we are now observing the beginning of the future global wave 5—an impulse wave. However, its early phase doesn't look like the beginning of an impulse. It is quite possible that wave 4 will become even more extended and unconventional.

Nevertheless, demand for the euro is growing, and that is encouraging. Let me remind you that this week (while the euro was rising) the market had more reasons to buy the dollar. And during the last 5–6 weeks, when demand for the dollar increased, there were actually more reasons for the euro to strengthen. So we continue to see paradoxes. The European economy still cannot support the euro, but in 2025 the euro appreciated not because of the EU economy. It grew because demand for the U.S. dollar declined almost the entire year. The fact that EUR/USD has been stable in recent months does not mean that market participants will not resume selling the U.S. currency in the months ahead.

I believe the trade war is far from over, and its constant escalation is also far from over. The Fed may refrain from a third consecutive easing round in December, but this will not change the "dovish" outlook for 2026 or Donald Trump's ongoing criticism. At the same time, the ECB has very likely (99% probability) completed its cycle of rate cuts.

General Conclusions

Based on the EUR/USD analysis, I conclude that the instrument continues forming an upward trend segment. Over the past several months, the market has paused, but Donald Trump's policies and the Federal Reserve remain significant factors that could weaken the U.S. dollar in the future. The target levels of the current trend segment may extend up to the 1.25 level. At the moment, corrective wave 4 continues to form and is becoming very complex and extended. Its latest internal structure—waves a-b-c-d-e—is close to completion or already complete. Consequently, I am again considering long positions with targets around the 1.19 level.

On a smaller scale, the entire upward trend segment is visible. The wave pattern is not entirely standard, as the corrective waves vary in size. For example, major wave 2 is smaller than inner wave 2 of wave 3. But this happens too. Let me remind you that it is best to identify clear structures on charts rather than force-fitting every wave. The current upward structure raises no doubts.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often indicate changes.
2. If you are not confident about what is happening in the market, it is better to stay out.
3. One can never have 100% certainty about the direction of movement. Do not forget protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.