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26.05.202619:59 Forex Analysis & Reviews: EUR/USD Analysis – May 26th: Market Activity Remains Extremely Weak

Relevance up to 12:00 2026-05-27 UTC--4

The wave pattern on the 4-hour chart for EUR/USD has changed somewhat. There is still no indication that the upward trend segment (shown in the lower chart), which began in January of last year, has been canceled. However, the trend structure has now taken on a corrective form.

From a long-term perspective, we can expect the formation of wave C, whose low should be below the low of wave A. At the moment, it is difficult to believe in such a strong decline of the euro, but the first quarter of 2026 demonstrated that geopolitics can work wonders and completely reverse trends.

On the lower timeframe, I can identify a classic three-wave upward corrective structure. After this structure was completed, a new downward trend segment began forming, which logically should be impulsive. If this assumption is correct, then we should expect the development of a five-wave structure within wave C of the higher degree, with targets below the 1.1400 level.

Are there any informational reasons to expect such a strong strengthening of the dollar? In my opinion, no — at least not at the moment. Last week showed that Tehran and Washington continue negotiations, which could theoretically end successfully. As long as those chances remain alive, it will be difficult for the dollar to continue strengthening.

The EUR/USD pair barely moved during Tuesday's trading session, with volatility remaining below 10 points by the beginning of the American session. Of course, the instrument may still move higher or lower before the end of the day, but for the second consecutive day we have witnessed extremely weak market movement despite the lack of news shortages.

For example, today it became known that the U.S. Navy struck Iranian missile launchers and boats, once again violating the ceasefire reached more than a month ago. Let me remind you that this is far from the first ceasefire violation by either Iran or the United States. As in previous cases, the response may remain restrained in order to avoid reigniting the war.

The American side stated that Iranian boats were laying mines in the Strait of Hormuz, forcing the U.S. Navy to carry out strikes against them. As I already mentioned, the market did not react to this news at all.

Nor did it react to today's speech by Isabel Schnabel, who openly stated that tighter monetary policy would be necessary in June (we will discuss both events in more detail in separate reviews). Despite the fact that the ECB may become the only major central bank to raise rates next month, the euro received absolutely no support from this.

Over the past week, even the British pound has been rising more actively, although the Bank of England is unlikely to raise rates in June due to slowing inflation in the U.K. to 2.8%.

The conclusion? The market is completely lifeless and barely reacts to anything anymore.

General Conclusions

Based on my EUR/USD analysis, I conclude that the instrument remains within an upward trend segment (lower chart), while in the shorter term it remains within a corrective structure. The corrective a-b-c wave structure appears complete.

Therefore, wave 3 or wave c is currently continuing to develop, potentially as part of 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 instead take the form of a simple a-b-c correction and finish near the 1.1578 level.

On the higher timeframe, an upward trend segment remains visible, after which a corrective wave structure begins forming. In the near future, we should expect the development of wave C with targets near the 1.1352 level, which corresponds to the 38.2% Fibonacci retracement level. After the completion of the A-B-C structure, a new long-term bullish trend may begin.

Key Principles of My Analysis

  1. Wave structures should be simple and easy to understand. Complex structures are difficult to trade and often change unexpectedly.
  2. If there is no confidence in what is happening in the market, it is better to stay out of it.
  3. There can never be complete certainty regarding market direction. Always use protective Stop Loss orders.
  4. Wave analysis can be combined with other forms of analysis and trading strategies.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Chin Zhao,
Analytical expert of InstaSpot
© 2007-2026
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