The wave pattern on the 4-hour chart for the EUR/USD pair has taken on a less desirable appearance, but it still raises no questions. There is still no talk of canceling the upward section of the trend that began in January of last year; only the internal wave structure is occasionally adjusted. In my opinion, the pair has completed the formation of the global wave 4 (lower chart). If this assumption is correct, then the formation of wave 5 is currently continuing, which may become quite extended, with targets reaching as far as the 25th level.

The internal wave structure of the presumed wave 5 is not entirely clear (upper chart). The upward set of waves cannot be considered impulsive due to fairly strong corrective waves. Therefore, at the moment it is interpreted as a-b-c-d-e. However, if wave 5 becomes extended, its internal structure will also turn out to be quite complex. I expect the EUR/USD pair to resume its rise, and the corrective a-b-c-d-e structure already appears fairly complete. Unfortunately, it may become more extended due to the conflict in the Middle East.

The EUR/USD pair declined by only 50 basis points on Monday compared with the close of last week. Fifty points under the current circumstances is very little; the European currency should be glad it got away with relatively minor losses. The energy crisis is gaining momentum and continues to weigh on the European currency. Unfortunately, the problem is not limited to oil or LNG. Why is the European currency reacting so painfully?

First of all, it should be noted that it is not only the euro that is falling. For example, the British pound is declining at a similar pace. This means that the market is primarily afraid not of the energy crisis, not of economic slowdown, and not of rising inflation. It is afraid of risk and is fleeing from it. The eurozone is indeed very vulnerable to any changes in the energy market. However, Brent crude oil has actually risen by less than $30 over the past week. That is still a lot, but we are not yet talking about a twofold or threefold increase, which could truly become devastating for the European economy.

Oil is supplied to global markets not only by Iran or Middle Eastern countries. It can also be purchased from other parts of the world. The price may be higher, but paying more is not necessarily a death sentence for an economy. In my opinion, investors are not overly concerned about a slowdown in the European economy, its complete paralysis, or anything similar. Rather, the U.S. currency is rising because demand for it is increasing due to the serious geopolitical situation in the Middle East. If this assumption is correct, then only a further escalation of the conflict can lead to new purchases of the dollar. Unfortunately, there are still no signs of de-escalation.

General conclusions

Based on the analysis of EUR/USD, I conclude that the pair continues forming an upward trend segment. The policies of Donald Trump and the Federal Reserve's monetary policy remain significant factors behind the long-term decline of the U.S. currency. The targets of the current trend segment may extend as far as the 25th level. At the moment, I believe the pair remains within the global wave 5, so I expect the quotes to rise during the first half of 2026. The corrective a-b-c-d-e structure may finish at any moment, as it already looks convincing. I believe it is now reasonable to search for zones and levels for new buy positions, with targets near 1.2195 and 1.2367, which correspond to 161.8% and 200.0% Fibonacci levels.

On a smaller timeframe, the entire upward trend segment is visible. The wave structure is not the most standard one, since corrective waves have different sizes. For example, the senior wave 2 is smaller than the internal wave 2 within wave 3. However, this sometimes happens. Let me remind you that it is best to identify clear structures on charts, rather than strictly tying analysis to every single wave. At the moment, the upward wave structure raises no doubts.

Main 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 what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty about the direction of movement. Do not forget about Stop Loss protective orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.