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The wave pattern on the 4-hour chart for EUR/USD has remained unchanged for several consecutive months. The formation of the upward trend section continues, while the news background continues to support all currencies except the dollar. The trade war initiated by Donald Trump was intended to boost budget revenues and reduce the trade deficit. However, these goals have yet to be achieved. Trade deals are signed with difficulty, and Trump's "One Big Law" will increase the U.S. national debt by 3 trillion dollars in the coming years. The market views the results of Trump's first six months in office very poorly, seeing only threats to American stability and well-being in his actions.
At the moment, wave 3 is presumably still forming, and it could become much longer than it currently appears. However, its internal structure has taken on a five-wave form, and thus it may already be complete. If the current wave layout is correct, the rise in quotes will continue over the coming months, but in the short term, we are likely to see a corrective wave sequence. The chances that Trump will abandon his new trade policy are virtually nonexistent.
The EUR/USD pair again showed little change on Wednesday, but if we total the movement over the past week, the U.S. dollar has still gained about 100 basis points. I find it hard to call a 1-cent rise "the beginning of a new trend section," or even a "corrective wave." The sellers' positions are so fragile that this "incomplete wave" could end its formation at any moment. And who can say there's no reason for that to happen already?
The week began without delay. The economic calendar is nearly empty this week, but Donald Trump stepped in. Since the start of the week, the U.S. president has already raised tariffs for 14 countries, announced increased duties on copper, pharmaceutical products, semiconductors, and hinted at additional duties for other product categories. From here, two scenarios are possible.
In theory, demand for the U.S. dollar should have declined this week. However, the market chose not to sell the dollar again over tariffs that may not even materialize. After all, an intention to impose tariffs is not the same as actually imposing them. Trump stated that 14 countries (and likely more) would face new tariffs starting August 1. The market reasonably decided that when August 1 arrives, we'll see what those tariffs actually look like—if they happen at all. As for tariffs on copper, pharmaceuticals, and semiconductors, Trump didn't bother to specify dates. He merely announced that any medicines could face a 200% tariff and copper up to 50%.
Based on all of the above, I believe the dollar is once again in a vulnerable position. According to the wave structure, we should now see at least three downward waves. However, in reality, this may turn out to be just one "incomplete wave," as the news background continues to exert strong pressure on the U.S. currency.
Based on the EUR/USD analysis, I conclude that the instrument is still in the process of forming an upward trend section. The wave structure remains heavily dependent on news related to Trump's decisions and U.S. foreign policy, with no positive changes in sight. The targets for wave 3 may extend all the way to the 1.25 level. Therefore, I continue to consider long positions, with targets around 1.1875, which corresponds to the 161.8% Fibonacci level. In the near term, we can expect a corrective wave sequence to form, and new euro purchases should be considered only after this correction is complete.
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