The wave pattern of the EUR/USD 4-hour chart has transformed, but overall it remains quite clear. There is no talk of canceling the upward trend segment that began in January 2025, but the wave structure has become significantly more complex since July 1 and has taken a more extended form. In my view, the pair has completed the formation of corrective wave 4, which took a very unconventional shape. Inside this wave, we observe exclusively corrective structures, so there is no doubt about the corrective nature of the decline.

In my opinion, the upward trend segment is not yet complete, and its targets stretch all the way into the 1.25 level. The a-b-c-d-e wave series looks finished, which means that in the coming weeks I expect a new upward sequence of waves to form. We have already seen the assumed waves 1 and 2, and now the pair is in the process of forming wave 3 or c. I expect the pair to rise to the 1.1717 level within this wave, which corresponds to 38.2% Fibonacci. However, from a formal point of view, wave 3 may be considered completed at any moment since it has exceeded the peak of wave 1.

The EUR/USD rate did not change on Monday. And this is yet another day in a long series where price movement has been almost nonexistent. Let me remind you that according to the CME FedWatch tool, the probability of a new round of monetary policy easing is around 90%. Therefore, there is no doubt the market has already priced in this decision by the U.S. regulator. Of course, there are still some questions regarding the FOMC meeting — and it is the answers to these questions that the market may be eagerly awaiting. But will it actually get any answers?

In recent days, many economists have been asking: How will the Fed act in the first two quarters of next year? Naturally, they expect an answer from Jerome Powell on Wednesday evening. However, I can disappoint many of them. Jerome Powell very rarely makes any promises. At best, the accompanying FOMC statement will be slightly adjusted — and only from these changes will it be possible to understand in which direction the Fed's outlook has shifted (if it has changed at all).

Yet even this scenario seems unlikely to me. In my view, neither Powell nor his colleagues will make hasty conclusions and especially will not give promises or hints without economic data. And there is still no fresh economic data on the labor market, unemployment, or inflation. Tomorrow the JOLTS and ADP reports will be released, which can provide an indirect picture of labor market conditions, but they have never been considered key indicators. Therefore, based on all of the above, I do not expect major events in the market this week. In my opinion, next week will be more important.

General Conclusions

Based on my EUR/USD analysis, I conclude that the instrument is continuing to build an upward trend segment. Over the past few months, the market has taken a pause, but Donald Trump's policy and the Fed remain significant factors that could lead to a decline in the U.S. dollar in the future. The targets of the current trend segment may extend into the 1.25 level. However, the latest upward segment has once again taken a corrective form, meaning that at minimum a downward wave within this segment may begin now, and at maximum a new downward corrective sequence of waves may unfold.

On the smaller scale, the entire upward trend segment is clearly visible. The wave layout is not the most standard, as the corrective waves vary in size. For example, the larger wave 2 is smaller than the internal wave 2 within wave 3. But such cases do occur. Let me remind you that it is better to isolate clear structures on the chart rather than tying yourself to every individual wave. At the moment, the upward structure raises no doubts.

The Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often indicate upcoming changes.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There is never — and can never be — 100% certainty in the direction of price movement. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.