The wave pattern on the 4-hour chart for EUR/USD has remained unchanged for several consecutive months. The formation of the upward trend segment continues, and the news background continues to support all currencies except the dollar. The trade war initiated by Donald Trump was intended to increase budget revenues and eliminate the trade deficit. However, these targets have yet to be achieved, trade deals are being signed with great difficulty, and Trump's "One Big Law" will increase the US national debt by 3 trillion dollars over the coming years. The market holds a rather negative view of Trump's first six months in office and sees his actions as a threat to American stability and prosperity.

At the moment, wave 3 is presumably still forming, and it may become much more extended than it currently appears. However, its internal structure has acquired a five-wave shape, and therefore may be complete. If this assumption is correct, the price increase will continue in the coming months, but in the short term, we may see a corrective wave pattern. There is virtually no chance that Trump will abandon his trade policy.

The EUR/USD pair fell by several dozen more basis points on Wednesday. The steady decline in prices is impressive, but at the same time, the current wave layout points to the formation of a corrective wave or wave set. The dollar has been falling long and painfully and deserves some recovery. I believe the market may still move another 100–200 points down. Beyond that, further appreciation of the dollar will be difficult.

Yesterday's inflation report revealed two clear takeaways. First, it is Jerome Powell, not Donald Trump, who should be believed. Let me remind you that the FOMC Chair had repeatedly warned of rising inflation due to the global trade war, while the US President insisted that inflation in America was low. As we can see, inflation is rising, and the trade war continues. I also believe that US inflation will keep rising in the coming months because the effects of tariffs are gradual. Starting next month, more than two dozen countries will face increased tariffs, and all imports of copper and pharmaceuticals will be subject to duties. Thus, a renewed rise in inflation is not just a hypothesis.

Second, Jerome Powell and many other Fed officials stated at the beginning of the year (even before the trade war began) that there would be, at most, two rounds of monetary policy easing. Once the trade war started, some FOMC members even considered zero rounds of easing this year, as inflation could rise significantly. The Fed initially took a hawkish stance, but the market constantly dismissed it, anticipating a much more dovish scenario. As we see now, the market was wrong again—just like last year, when it expected 6–7 rounds of rate cuts.

Based on the above, I believe the dollar can only count on a corrective wave pattern. It may take a few more weeks, but afterward, I expect a new rise in the instrument.

General Conclusions

Based on the EUR/USD analysis, I conclude that the instrument is continuing to form an upward trend segment. The wave layout still fully depends on the news background, particularly Trump's decisions and US foreign policy, and there are still no positive developments. The trend segment may extend as far as the 1.25 level. Therefore, I continue to consider long positions with targets around 1.1875, which corresponds to the 161.8% Fibonacci level, and potentially higher. In the near term, a corrective wave pattern is expected, so new euro purchases should be considered after this correction is complete.

My core analysis principles:

1. Wave structures should be simple and clear. Complex structures are hard to trade and often shift.
2. If there's no confidence in what's happening in the market, it's better to stay out.
3. Absolute certainty in market direction doesn't exist. Don't forget protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.