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The wave count on the 4-hour chart for EUR/USD has undergone minor changes, but nothing has fundamentally changed. There is still no talk of canceling the upward section of the trend that began in January last year; only the internal wave structure is occasionally adjusted. In my view, the pair has completed the construction of the global corrective wave 4. If this assumption is correct, then the construction of wave 5 has now begun and continues, with targets scattered up to the 25th level.
The internal wave structure of the assumed wave 5 is not entirely straightforward. The upward sequence of waves cannot be considered impulsive due to fairly strong corrective waves. Therefore, at the moment it is interpreted as a-b-c-d-e. However, if wave 5 becomes extended, its internal structure will also turn out to be quite complex. As a result, we may currently observe the construction of wave 3 within 3 within 5. In any case, I expect further upside for EUR/USD, but in the coming days the market may shift to constructing a corrective wave—at least one.
EUR/USD declined by literally 10 basis points on Friday by the start of the US session. As often happens, price changes by the end of the day can be much more significant—especially since today the world may learn the name of the new Fed president. Rumor has it that Trump's advisor Kevin Warsh will take the role. As they say, "checkmate" for Christopher Waller, Kevin Hassett, and Michelle Bowman, who also sought the position and actively supported monetary easing in recent months.
However, by Friday, although quite a bit of news had reached the market, it generated almost no interest among participants. The German economy once again showed disappointing results, despite values being more optimistic than traders expected. The unemployment rate fell to 6.2%, and GDP growth in Q4 was 0.3%. Who could call these figures strong? In the US, alarm is raised because unemployment has risen to 4.4% in recent years, and GDP growth will soon exceed the unemployment rate. Yet none of this helps the US dollar, and the market sees nothing positive in it.
Thus, with unemployment above 6% and growth rates much closer to 0 than to 1, the market also saw nothing cheerful or encouraging. Based on all of the above, the construction of a corrective wave or wave set has begun and continues. It is proceeding very slowly for now, but one should not underestimate Donald Trump, who is preparing two "information bombs" for the market: an attack on Iran and the announcement of the new FOMC chair.
Based on the EUR/USD analysis, I conclude that the pair continues the construction of the upward section of the trend. Donald Trump's policies and the Fed's monetary policy remain significant factors in the long-term decline of the US dollar. The targets of the current trend section may extend up to the 25th level. At the moment, I believe the global wave 4 has completed its formation, so I expect further price increases. However, in the near term, I anticipate a downward wave, as the a-b-c-d-e wave series also looks complete. In any case, I would not advise anyone to trade the correction right now.
At a smaller scale, the entire upward trend section is visible. The wave count is not entirely standard, as corrective waves have different sizes. For example, the larger wave 2 is smaller in size than the internal wave 2 within 3. However, this can happen. I would remind you that it is best to identify clear structures on the charts rather than tie yourself to every wave. The current upward wave structure leaves no doubts.
Key Principles of My Analysis:
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