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The wave structure on the 4-hour chart for EUR/USD has remained unchanged for several months, which is encouraging. Even during the formation of corrective waves, the structure has maintained its integrity. This allows for accurate forecasts. It is worth noting that the wave structure does not always resemble the textbook pattern. Right now, however, it looks very clear.
The bullish section of the trend is still developing, while the news background continues to support mostly not the dollar. The trade war initiated by Donald Trump continues. The confrontation with the Fed continues. Market "dovish" expectations are increasing. Trump's "One Big Law" will raise U.S. public debt by 3 trillion dollars, while the U.S. president regularly raises tariffs and introduces new ones. The market has given a poor assessment of Trump's first 6–7 months in office, even though GDP growth reached 3% in the second quarter.
At this stage, it is possible to assume that wave 4 has been completed. If that is indeed the case, then the construction of impulse wave 5 has begun, with targets extending as far as the 1.25 level. Of course, the corrective structure of wave 4 could still evolve into a longer five-wave form, but I am working from the most likely scenario.
On Tuesday, EUR/USD slipped by a couple of dozen basis points, but the annual Nonfarm Payrolls report has not yet been released. Therefore, I expect market activity to increase significantly later in the day. For now, however, there is virtually no news in the market. Last week was full of reports, while this one is relatively empty.
Market participants have turned their attention to the political crisis in France, which could see the country's prime minister resign. But let's be honest—every year, in one EU country or another, a political crisis arises. Economically, this means very little. One prime minister leaves, another arrives. If parliament is dissolved, a new one will be elected. Personally, I see no real issue here.
From my perspective, the Nonfarm Payrolls report is much more important. It could worsen the already fragile situation for the U.S. currency, which has been under heavy pressure throughout 2025. If today's payrolls report shows a contraction in actual job creation, it will not affect the Fed's decision next week. However, it will further dampen sentiment among dollar buyers. The dollar seems to be at a point where it has little room left to fall—but in my view, that is not the case.
The market may have already priced in a September Fed rate cut, as that decision has been anticipated since the beginning of the year. However, it is unlikely that subsequent rounds of easing have been fully factored into prices. In any case, it is hard to imagine that demand for the U.S. dollar will not continue to decline while the FOMC actively pursues monetary easing. One way or another, we have a clear wave structure. If it begins to change, then alternative scenarios can be considered.
Based on my EUR/USD analysis, I conclude that the pair continues building a bullish section of the trend. The wave structure remains fully dependent on the news background related to Trump's decisions and U.S. foreign policy. Trend targets may extend as far as the 1.25 level. Therefore, I continue to consider purchases with targets around 1.1875, which corresponds to the 161.8% Fibonacci level, and higher.
Key principles of my analysis:
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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