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The wave pattern on the 4-hour chart for EUR/USD has changed somewhat. There is still no talk of canceling the upward trend segment (lower chart), which began in January of last year, but the trend structure has now taken on a corrective appearance. In the long term, wave C may be expected to develop, with its low likely positioned below the low of wave A. At the current stage, it is difficult to believe in such a strong decline of the euro, but the first quarter of 2026 demonstrated that geopolitics can produce dramatic shifts and reverse trends.
On the lower time frame, I can identify a classic three-wave bullish corrective structure. After its completion, a new downward trend segment began to form, which logically should take the shape of an impulse wave. If this assumption is correct, then we should expect the formation of a five-wave structure within wave C of the higher order, with targets below the 1.1400 level. Are there fundamental reasons to expect such a strong strengthening of the dollar? In my opinion, at present — no. Last week showed that Tehran and Washington continue negotiations that could theoretically end successfully. As long as those chances remain, it will be difficult for the dollar to continue strengthening.
The EUR/USD pair gained 40 basis points on Monday, although most of the movement occurred during the first hour after the market opened following the weekend. The reasons behind the sharp rise in the euro (or, more precisely, the decline in the dollar) are obvious. Over the weekend, Donald Trump stated that an interim agreement with Iran was practically finalized, meaning that the Strait of Hormuz could soon be reopened. Therefore, the increase in risk appetite across the market is not surprising.
However, I would like to draw attention to another aspect — how weak the EUR/USD rally actually was on Monday.
If market participants truly trust Trump's statements, then why was the dollar's decline so limited? After all, according to these claims, the agreement is nearly signed, the Strait of Hormuz is about to receive a "second birthday," and the conflict in the Middle East is supposedly nearing its end. The point is precisely that the market's reaction to Trump's statements on Monday demonstrates a very low level of trust in his words.
Simply put, the market does not believe that the agreement is already "95% complete," regardless of what unnamed insiders may claim. Moreover, Monday has now arrived, Sunday has passed, and no confirmation of Trump's statements has come from Iran. If all major disagreements between Tehran and Washington have truly been resolved, then what is preventing officials from openly announcing that an agreement is close?
In my view, Trump's statements over the weekend represent another attempt at psychological pressure on Iran, as well as an effort to present wishful thinking as reality. If negotiations collapse once again, Trump will later be able to claim that he did everything possible and that the agreement was already nearly finalized, but Iran rejected the U.S. proposal at the last moment. In other words, this optimistic rhetoric from the U.S. president serves as a form of political insurance in case no agreement is ultimately reached.
Based on the EUR/USD analysis, I conclude that the pair remains within the upward trend segment (lower chart), while in the shorter term it remains within a corrective structure. The corrective a-b-c wave structure appears complete. Therefore, wave 3 or c is currently continuing to develop and may itself become part of wave C. The entire wave C (if the current wave count is correct) could complete much lower than the 1.1400 level. However, such a scenario would require strong geopolitical support. Otherwise, the downward wave structure may instead take the form of an a-b-c correction and conclude near the 1.1578 level.
On the higher time frame, an upward trend segment remains visible, followed by the formation of a corrective wave structure. In the near future, wave C is expected to develop with targets near the 1.1352 level, which corresponds to the 38.2% Fibonacci retracement. After the completion of the A-B-C structure, a new long-term bullish trend may begin.
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