12.01.202601:15 Analisis Forex & Kajian: The Euro. Preview of the week

The European currency has been falling against the dollar for three consecutive weeks. The decline in EUR/USD began precisely at Christmas and has not stopped since. What is it due to? In my view, it is solely the wave count. There was no news over the holidays in either the U.S. or the European Union, and the instrument's decline can be considered ordinary market noise. However, the holidays ended, and the decline continued. Last week, the news flow hardly supported the strengthening of the U.S. currency, since most reports from America were disappointing. And the most difficult thing in the current situation is to reconcile the news flow with the instrument's movements. The U.S. dollar is not strengthening enough to say the market is reacting to military actions and Trump's threats. And the news flow, in my opinion, is too weak for the market to increase demand for it. Based on this, I believe the instrument began forming a corrective wave, or a set of waves, and that the waves will determine the further dynamics.

Next week, there is next to no news in the European Union. The first report will be released on Thursday, when the market will learn the industrial production volumes for Europe in November. Also, Germany's final GDP for 2025 will be released that day. These two reports are, broadly speaking, the only ones in the Eurozone next week. I find it difficult to expect positive values from either EU industrial production or German GDP. I believe that market participants, if they are paying attention to news and economic data at this time (which is hard to say given the minimal amplitude of movements each day), are mostly focused on American reports. And those are very difficult to interpret unambiguously.

Wave picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument remains in an upward trend. Donald Trump's policy and the Federal Reserve's monetary policy remain significant factors in the long-term decline of the U.S. currency. The targets of the current trend segment may extend to the 25th figure. The current upward wave set may be complete, so the instrument faces a near-term decline. The trend segment that began on November 5 may still take on a five-wave appearance, but, right now, it is a corrective wave.

Wave picture for GBP/USD:

The wave picture of GBP/USD has changed. The downward corrective structure a-b-c-d-e in C of 4 appears to be complete, as does the entire wave 4. If this is indeed the case, I expect the main trend segment to resume its development with initial targets around the 38 and 40 figures.

In the short term, I expected the formation of wave 3 or c with targets located near the marks 1.3280 and 1.3360, which correspond to 76.4% and 61.8% on the Fibonacci scale. These targets have been reached. Wave 3 or C has presumably completed its formation, so in the near term, a downward wave or a set of waves may be observed.

Main principles of my analysis:

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