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The wave structure on the 4-hour chart for EUR/USD has changed. There is still no talk of canceling the upward trend segment (lower chart), which began in January of last year, but the wave structure itself now looks quite ambiguous. In such situations, I always recommend switching to a lower timeframe (upper chart) and focusing on the simplest, smaller wave structures in order to make a short-term forecast—which is usually sufficient for opening trades. Wave patterns can be very complex and allow for multiple scenarios. The easiest approach is to trade standard "five-three" structures.
In the chart above, a classic five-wave impulsive structure with an extended third wave can be identified. If this interpretation is correct, then this structure has already been completed, and we should expect the formation of a corrective sequence of at least three waves. Therefore, in the near term, a rise in the instrument's quotes is likely—but within a correction relative to the latest trend segment. For now, recent wave formations do not fit well into the higher-level structure, but this should become clearer over time. In the near future, the euro may recover toward the levels of 1.1666 and 1.1745.
The EUR/USD pair rose by 75 basis points on Wednesday and added another 20–30 points on Thursday. In general, the euro's rally effectively ended yesterday, when it became clear that the ceasefire had been violated within the first 24 hours. At this point, it is difficult to determine exactly who broke it. However, the fact remains: Israel, Iran, Lebanon, and other Persian Gulf countries have resumed missile attacks, and the Strait of Hormuz is once again blocked. Against this backdrop, oil prices have started rising again, and the dollar's decline has abruptly halted. I believe the market is hoping for peace but, under current conditions, is in no hurry to either buy or sell. There is simply too much uncertainty.
While geopolitical news is quiet, the U.S. released its final estimate of fourth-quarter GDP. It showed that the American economy grew by just 0.5%, with each subsequent estimate lower than the previous one. As has been typical over the past two months, the market largely ignored this report. Tomorrow, the U.S. will also release March inflation data, and it is not hard to anticipate the result. Inflation is almost certain to rise above 3%, but this report may also be overlooked by market participants. Traders are waiting either for further progress toward peace in the Middle East or for a complete collapse of the ceasefire. Depending on which scenario unfolds, the instrument will continue moving in a corresponding direction. The corrective a-b-c wave structure currently appears to be complete.
Based on the analysis, I conclude that EUR/USD remains within an upward trend segment (lower chart), while in the short term it is within a corrective structure. The corrective wave sequence appears complete and could only evolve into a more complex and extended formation if a stable ceasefire is established between Iran, the U.S., Israel, and all other countries in the Middle East. Otherwise, I believe a new downward wave sequence could begin from current levels.
On the lower timeframe, the entire upward trend segment is visible. The wave structure is not entirely standard, as corrective waves vary in size. For example, the larger wave 2 is smaller than the internal wave 2 within wave 3. However, such variations do occur. It is important to focus on identifying clear and understandable structures rather than rigidly labeling every wave. The trend may reverse in the near future.
Key principles of my analysis:
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