The wave pattern on the 4-hour chart for EUR/USD has changed in form. There is still no indication that the upward trend segment (lower chart), which began in January last year, has been canceled, but the trend structure has now taken on a corrective appearance. In the long term, wave C may develop, with its low expected to form 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 dramatically alter market trends.
On the lower timeframe, I can identify a classic three-wave upward corrective structure. After the completion of this structure, a new downward trend segment began to form, which logically should be impulsive in nature. If this assumption is correct, we can expect the development of a five-wave structure within wave C of the higher order, with targets below the 1.1400 level. Are there currently any fundamental reasons to expect such a strong strengthening of the dollar? In my view, no. Monday showed that Tehran and Washington may return to the negotiating table, which reduces the likelihood of further significant dollar appreciation.
The euro remains under pressure.
The EUR/USD pair showed almost no change during Friday, but overall continued to decline gradually throughout the week. The low volatility and frequent shifts in direction indicate, first, that the market itself does not understand what to expect next, and second, that Iran and the United States are unable to provide markets with clear information based on facts rather than expectations, threats, opinions, or yet another "insider" report. Throughout this week, market participants received information almost daily that contradicted previous reports. At one moment, Iran and the United States appeared close to signing an agreement; at another, the war seemed likely to resume within days. One report suggested the parties were moving closer together, while another claimed they were drifting further apart. As a result, the market simply grew tired of reacting to news that has little connection with the actual state of affairs, which is currently known only to a limited number of people worldwide. The market has effectively paused until the parties finally decide which direction they want to pursue next: renewed war or peaceful coexistence.
In my opinion — and I have repeated this view many times — the chances of peace in the near future remain minimal. Even various "insider reports" confirm that Tehran and Washington have made little progress in recent weeks regarding the most important issues. Therefore, I do not fully understand the point of reaching agreements on secondary matters if the core disagreements remain unresolved and progress on them remains highly questionable. At the same time, under current conditions the market is in no rush to buy dollars, because if negotiations are continuing, then the possibility of peace still exists. However, traders are also unwilling to sell the dollar aggressively, since negotiations have been ongoing for several months without producing meaningful results.
General Conclusions
Based on the EUR/USD analysis, I conclude that the pair remains within a broader upward trend segment (lower chart), while in the shorter term it remains within a corrective structure. The corrective a-b-c wave formation appears complete. Consequently, wave 3 or wave c is currently continuing to develop, potentially as part of a larger wave C. The entire wave C (if the current wave count is correct) could complete far below the 1.1400 level. However, such a scenario would require strong geopolitical support. Otherwise, the downward wave structure may itself take the form of an a-b-c correction and complete near the 1.1578 level.
On the higher timeframe, an upward trend segment remains visible, followed by the formation of a corrective wave structure. In the near future, wave C is expected to form with targets located around the 1.1352 level, corresponding to the 38.2% Fibonacci retracement level. Once the A-B-C structure is completed, a new long-term upward trend may begin to develop.
Core Principles of My Analysis
- Wave structures should remain simple and easy to understand. Complex structures are difficult to trade and often undergo revisions.
- If there is no confidence in current market conditions, it is better to stay out of the market.
- Absolute certainty regarding market direction never exists. Always remember to use protective Stop Loss orders.
- Wave analysis can be combined with other forms of analysis and trading strategies.
