22.08.202522:02 Forex Analysis & Reviews: EUR/USD Analysis on August 22, 2025

The wave pattern on the 4-hour chart for EUR/USD has remained unchanged for several months, which is very encouraging. Even when corrective waves are formed, the integrity of the structure is preserved. This allows for accurate forecasts. I should note that wave patterns do not always look "textbook-perfect," but the current structure does.

The upward trend segment continues to develop, while the news background continues to provide limited support for the dollar. The trade war initiated by Donald Trump continues. The confrontation with the Fed continues. Dovish expectations are growing. Trump's "big law" will add 3 trillion dollars to U.S. government debt, while the president keeps raising tariffs and imposing new ones. The market gives a poor assessment of Trump's first six months in office, even though economic growth reached 3% in the second quarter.

At present, it can be assumed that wave 4 is complete. If so, the construction of impulsive wave 5 has begun, with potential targets extending up to the 1.25 level. Certainly, corrective wave 4 could take a more extended five-wave form, but I am relying on the most probable scenario.

The EUR/USD pair hardly moved on Friday. Overall, since the market opened on Monday night, the instrument declined by 100 basis points, which was hardly noticeable day by day. However, in total, the dollar gained a full cent. But what does this cent change? The wave structure remains upward. The most the dollar can expect is the formation of a fifth corrective wave e. Even if this scenario materializes, once this corrective structure is complete, a new upward trend segment will begin. In other words, the dollar is facing a dead end in every direction.

This week, the news background was nearly absent. The only noteworthy releases were the U.S. services and manufacturing PMIs published yesterday, showing dynamics for August. While services contracted slightly, manufacturing grew significantly, which supported demand for the dollar. However, from the beginning of the week, the market has been focused on Jerome Powell's speech at his last Jackson Hole symposium. As usual, there are many opinions. Some analysts believe Powell must soften his tone, otherwise the labor market will continue to "cool." Others think Powell's rhetoric will remain unchanged, as U.S. inflation has been accelerating in recent months. Still others assume Powell will not provide any hints at all. Nevertheless, all market participants expect monetary easing in September. In my view, Powell will avoid drastic moves because the situation is highly unstable, and the upcoming inflation and labor market reports will provide the basis for the final and only correct decision.

General Conclusions

Based on the analysis of EUR/USD, I conclude that the pair continues to form an upward trend segment. The wave pattern still depends entirely on the news background tied to Trump's decisions and U.S. foreign policy. The targets of the trend segment may extend up to the 1.25 level. Therefore, I continue to view long positions with targets around 1.1875, which corresponds to 161.8% Fibonacci, and higher. I assume that wave 4 is complete. Accordingly, it is still a good time to buy.

Main principles of my analysis:

1. Wave structures should be simple and clear. Complex ones are difficult to trade and often undergo changes.
2. If there is no confidence in the market situation, it is better not to enter.
3. Absolute certainty about the direction is impossible. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.