The wave pattern on the 4-hour chart for EUR/USD has taken on a less favorable appearance, but it does not raise major concerns. There is still no talk of canceling the upward trend segment that began in January of last year; only the internal wave structure is being adjusted from time to time. In my view, the pair has completed the formation of global wave 4 (lower chart). If this assumption is correct, then wave 5 has now begun and continues to develop. It could become quite extended, with targets reaching up to the 1.2500 level.

The internal structure of the presumed wave 5 is not entirely clear (upper chart). The upward wave sequence cannot be considered impulsive due to rather strong corrective waves. Therefore, at this stage, it is interpreted as an a-b-c-d-e structure. However, if wave 5 becomes extended, its internal structure will also be quite complex. If that is the case, the wave labeling will likely undergo further revisions. In any case, I expect further growth in EUR/USD, although in the coming days the market may form one or several corrective waves.

EUR/USD declined by 25 basis points on Wednesday. One could say that the euro escaped with minor losses, but by the end of the day the situation could worsen. At the start of the U.S. session, the market received data it had been awaiting since early last week. Two reports were expected to determine the near-term direction of the dollar and EUR/USD, as well as answer the question of whether the Fed might ease monetary policy in the foreseeable future. It must be said that a clear answer was provided.

Despite the very weak ADP report, Nonfarm Payrolls showed 130,000 new jobs, significantly above market expectations. At the same time, the unemployment rate fell to 4.3%, which was also unexpected. Thus, two of the three most important reports this week favored dollar buyers and U.S. currency strength.

Judging by the market reaction in the first few hours after the data release, it may seem that the dollar did not gain significant momentum. We did see buying of the U.S. currency, but the strengthening may end quickly. In my view, the recovery in the U.S. labor market is an important factor that only offsets concerns about potential Fed easing in the near term. According to the CME FedWatch tool, even before these reports, the market was not expecting a rate cut until at least summer. Therefore, while labor market recovery is positive, today's data has not significantly changed the overall picture.

General Conclusions

Based on the analysis of EUR/USD, I conclude that the pair continues to form an upward trend segment. Donald Trump's policies and the Fed's monetary policy remain significant long-term factors weighing on the U.S. dollar. The targets for the current trend segment may extend to the 1.2500 level. At present, I believe the instrument remains within global wave 5, so I expect price growth in the first half of 2026. However, in the near term, I anticipate a downward wave (or a series of waves), as the a-b-c-d-e structure also appears complete. In the near future, traders may look for new buying areas and levels with targets around 1.2195 and 1.2367, corresponding to the 161.8% and 200.0% Fibonacci levels.

On a smaller timeframe, the entire upward trend segment is visible. The wave structure is not entirely 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, such variations do occur. I remind readers that it is best to identify clear structures on charts rather than strictly adhere to labeling every wave. At present, the upward wave structure does not raise doubts.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often change.
2. If there is no confidence in market conditions, it is better to stay out.
3. Absolute certainty about direction never exists. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.