The wave pattern on the 4-hour chart for EUR/USD has changed. There is still no reason to abandon the bullish trend segment (lower chart), which has been developing since January of last year. However, the trend structure has now taken on a corrective form. From a long-term perspective, wave C can be expected to develop, with its low likely positioned below the low of wave A. At the current stage, such a substantial decline in the euro is difficult to envision, but the first quarter of 2026 demonstrated that geopolitics can produce dramatic shifts and reverse established trends.
On the lower time frame, I can identify a classic five-wave bearish structure. After this structure is completed, the pair may transition to an upward wave sequence, and at the moment the structure appears complete. Therefore, a rise in the euro can be expected from the 1.1513 level, which corresponds to the 76.4% Fibonacci retracement level. However, without geopolitical support, the euro cannot count on favorable market sentiment.
The EUR/USD pair gained 40 basis points on Thursday, with most of the movement occurring during the evening session. What do you think caused the euro to rally by 80 basis points from the day's low? No, it was not the ECB meeting, Christine Lagarde's speech, or the first monetary policy tightening since 2023. The rally was triggered by Donald Trump, who once again managed to accomplish the impossible by making several completely contradictory statements during the day.
If the U.S. president were speaking about upcoming elections, new legislative initiatives, or policy proposals, the market would likely ignore his constantly changing rhetoric. However, the White House leader comments daily on developments in the Middle East, over which he has direct influence. Put simply, Trump shares his plans with the markets several times a day, and those plans constantly change. As a result, the market continues to swing from one direction to another.
On Thursday morning, Trump was planning new strikes against Iran, accusing Tehran of delaying negotiations and refusing to reach an agreement. By the evening, however, he announced that new strikes had been canceled because an agreement with Tehran could be signed in the near future.
The day before, Trump had actively ordered strikes against Iran. Earlier still, he stated that no further strikes would take place because, according to him, senior Iranian officials had contacted him and requested that he refrain from doing so. Such statements are often made only hours apart. Therefore, Thursday's EUR/USD rally was entirely attributable to Trump's comments.
How Will Events Develop From Here?
We believe a turning point is approaching. Every day, the market receives further confirmation that Trump's statements cannot be relied upon under any circumstances. The wave structure suggests the formation of a corrective upward wave sequence, while the 1.1513 level has already withstood selling pressure twice. In my view, the probability of further gains in the instrument remains high.
General Conclusions
Based on the EUR/USD analysis, I conclude that the instrument remains within a bullish trend segment (lower chart), while in the shorter term it remains within a bearish trend segment that may already be complete. In my view, this is a reasonably favorable time to consider establishing long positions.
The failed attempt to break below the 1.1513 level, which corresponds to the 76.4% Fibonacci retracement level, together with the completed appearance of the bearish trend segment, allows us to assume that the instrument may transition to an upward wave sequence with targets located around the 1.1700 level and higher.
On the higher time frame, a bullish trend segment remains visible, followed by the development of a corrective wave structure. In the near term, wave C is expected to form, with targets located near 1.1352, which corresponds to the 38.2% Fibonacci retracement level. Once the A-B-C structure is completed, a new long-term bullish trend may begin.
Key Principles of My Analysis:
- Wave structures should be simple and easy to interpret. Complex structures are difficult to trade and often undergo revisions.
- If there is no confidence in the market situation, it is better to stay out of the market.
- Absolute certainty regarding market direction never exists and never will. Always remember to use Stop Loss orders.
- Wave analysis can be combined with other forms of analysis and trading strategies.
