The wave pattern on the 4-hour chart for EUR/USD looks quite clear, although fairly complex. There is no indication that the bullish trend segment that began in January 2025 has been canceled, but the wave structure since July 1 has taken on a complex and extended form. In my view, the instrument has completed the formation of corrective wave 4, which developed in a very unconventional manner. Within this wave, we observed exclusively corrective structures, so there is no doubt about the corrective nature of this wave.

In my opinion, the construction of the bullish trend segment has not yet been completed, and its targets are spread as high as the 1.25 level. The series of waves a–b–c–d–e appears complete; therefore, in the coming weeks I expect the formation of a new bullish wave sequence. We have seen the presumed waves 1 and 2, and the instrument is now in the process of forming wave 3, or c. This wave is taking on a fairly extended form, which is very positive, as it increases the likelihood that it will be impulsive—and, along with it, the entire bullish wave sequence.

The EUR/USD rate barely changed during Tuesday. Market volatility remains low as the market prepares for the New Year. Only two working days remain this week, and I strongly doubt that market participants will be actively opening trades on December 31 or January 2, given the complete absence of a news backdrop.

The year 2025 is coming to an end, and in summary only one conclusion can be drawn: the dollar has demonstrated record weakness, losing ground against virtually all currencies worldwide. Donald Trump's policies have dealt a crushing blow to the dollar, but the White House is pleased with this outcome, as a weaker currency is seen as a solution to the problem of low exports and a negative trade balance. Therefore, I have no doubt that the decline in the dollar's value will continue in 2026. However, the dollar should fear not only Trump's policies, but also those of the FOMC. At its December meeting, the FOMC showed readiness to cut interest rates once in 2026 (according to the dot plot). However, many market participants and economists are already convinced that there will be at least three rounds of easing. The labor market remains weak, Trump continues to demand a rate cut of at least 100 basis points, Jerome Powell is leaving his post, and inflation—contrary to market expectations—slowed in November. Consequently, the Fed has everything it needs not to delay further easing. The market understands this and may resume selling the US currency as early as January, as the outlook for the dollar in 2026 remains negative.

General Conclusions

Based on the EUR/USD analysis, I conclude that the instrument continues to form a bullish trend segment. Donald Trump's policies and the Fed's monetary policy remain significant long-term factors weighing on the US dollar. The targets of the current trend segment may extend as far as the 1.25 level. The current upward wave sequence is beginning to develop, and there is reason to believe that we are now witnessing the formation of an impulsive wave structure within the global wave 5. In this case, further growth should be expected, with targets near 1.1825 and 1.1926, corresponding to the 200.0% and 261.8% Fibonacci levels.

On a smaller time scale, the entire bullish trend segment is visible. The wave structure is not entirely standard, as corrective waves differ in size. For example, the larger wave 2 is smaller than the internal wave 2 within wave 3. However, this does happen. Let me remind you that it is best to identify clear and understandable structures on charts, rather than strictly adhering to every single wave. At present, the bullish structure raises no doubts.

Key Principles of My Analysis

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often signal changes.
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 100% certainty about market direction. Do not forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.