The wave pattern on the 4-hour chart for EUR/USD has changed, but overall it still remains quite clear. There is no talk of canceling the upward trend segment that began in January 2025; however, the wave structure starting from July 1 has taken on a complex and extended form. In my view, the instrument has completed the formation of corrective wave 4, which took a very unconventional shape. Within this wave, we observed exclusively corrective structures, so there is no doubt about the corrective nature of the decline.

In my opinion, the construction of the upward trend segment is not complete, and its targets extend as far as the 2.5000 level. The series of waves a–b–c–d–e looks complete; therefore, I expect the formation of a new upward wave sequence in the coming weeks. We have seen the presumed waves 1 and 2, and the instrument is now in the process of forming wave 3, or wave c. I expected this wave to push the instrument up to the 1.1717 level, which corresponds to the 38.2% Fibonacci level; however, this wave is taking on a more extended form, which is very positive, as it may turn out to be impulsive. Along with it, the entire upward wave sequence could also become impulsive.

The EUR/USD exchange rate rose by several dozen basis points during Thursday, heading into the U.S. session. At the same time, it is not entirely clear which factor specifically drove the increase in demand for the instrument. Let me remind you that at approximately the same time today, the outcomes of the ECB meeting, the Bank of England meeting, and, to top it all off, the U.S. inflation report for November were released. Let us set aside the Bank of England meeting, as it is more relevant to the British pound, and focus on the ECB meeting and U.S. inflation.

The ECB meeting was unlikely to surprise anyone. I said yesterday that maintaining the current monetary policy was easy to predict given the existing economic indicators. The European regulator did not "reinvent the wheel" and made the decision the market was expecting. I will not go into details for now, as it is important to understand that nothing fundamentally changed in the news backdrop for the European currency.

The U.S. inflation report, however, is far more interesting. Earlier this week, the UK inflation report was released, surprising many with a slowdown to 3.2%, which allowed the Bank of England to ease policy today without concern. Now it is the turn of U.S. inflation, which suddenly slowed to 2.7%, allowing the Federal Reserve to carry out another round of policy easing in January. I believe the dollar is declining today solely because of the inflation report, which sharply increases the chances of another interest rate cut in January.

Overall Conclusions

Based on the EUR/USD analysis conducted, I conclude that the pair continues to form an upward trend segment. Donald Trump's policies and the Federal Reserve's monetary policy remain significant factors behind the long-term decline of the U.S. dollar. The targets of the current trend segment may extend as far as the 2.5000 level. The current bullish wave sequence is beginning to gain momentum, and I would like to believe that we are now witnessing the formation of an impulsive wave structure that is part of global wave 5. In this case, growth toward the 2.5000 level should be expected, as I have mentioned before.

On a smaller timeframe, the entire upward trend segment is clearly visible. The wave structure is not the most standard, as corrective waves differ in size. For example, the higher-degree wave 2 is smaller than the internal wave 2 within wave 3. However, this also happens. I would like to remind you that it is best to identify clear and understandable structures on charts, rather than trying to strictly label every single wave. At present, the bullish structure raises no doubts.

Core Principles of My Analysis

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often signal changes.
2. If there is no confidence in what is happening in the market, it is better to stay out of it.
3. There is no and never can be 100% certainty about market direction. Do not forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.