The 4-hour wave pattern for EUR/USD has remained unchanged for several months, which is encouraging. Even when corrective waves form, the structure's integrity is preserved, allowing for accurate forecasts. It is worth noting that wave patterns do not always look exactly like textbook examples.

The construction of the upward trend segment continues, while the news backdrop largely fails to support the dollar. The trade war launched by Donald Trump is ongoing. The confrontation with the Federal Reserve continues. Dovish expectations are growing. Trump's "one big law" will increase U.S. national debt by 3 trillion dollars, while the U.S. president keeps raising tariffs and introducing new ones. The market has a rather low opinion of Trump's first six months in office, despite 3% economic growth in Q2.

At present, it can be assumed that the formation of wave 4 has been completed. If so, the construction of impulsive wave 5 has begun, with potential targets extending up to the 1.25 level. Of course, the corrective structure of wave 4 could take a more extended five-wave form, but my baseline scenario is based on the most likely outcome.

The EUR/USD pair rose about 50 basis points on Wednesday, though the amplitude of movements was not particularly high. Even such movements are noteworthy given the lack of news today. In the first half of the day, the market continued to trade on emotions linked to recent U.S. labor market and inflation reports. The labor market showed a sharp slowdown in May–July 2025, which came as a surprise to everyone. Initial versions of the reports for this period were quite optimistic, so no one suspected the real situation was so poor.

However, the U.S. Bureau of Labor Statistics delivered a genuine surprise a week ago — unfortunately, a negative one — which cost its director her job. Donald Trump preferred to put all the blame on Erica MacEntarfer, although, in essence, there was little fault on her part. The Bureau simply processes the incoming data, compiles the results, and publishes them. If the information for May–July was erroneous or inaccurate, this was not, in my view, the fault of Ms. MacEntarfer.

Nevertheless, the labor market is cooling, and this can no longer be denied. At the same time, the Consumer Price Index remains indifferent to Donald Trump's trade war. By simple logic, inflation should inevitably rise in 2025, since Trump's trade war has pushed import tariffs to their highest level in 50 years. Moreover, the U.S. president keeps raising them, and even signed trade agreements still include certain tariffs.

Based on all this, the Fed now has a carte blanche. No one will reproach Jerome Powell for cutting interest rates, while the Fed's refusal to ease in September would now raise eyebrows not only from Trump and the Republicans. Demand for the U.S. currency is declining against the backdrop of dovish market expectations, which, for the first time in a long while, are grounded in real data.

Overall conclusions

Based on the analysis of EUR/USD, the pair continues building an upward trend segment. The wave pattern still fully depends on the news backdrop related to Trump's decisions and U.S. foreign policy. The targets for this trend segment could extend up to the 1.25 level. Therefore, I continue to consider long positions with targets near 1.1875, which corresponds to the 161.8% Fibonacci level, and above. I believe wave 4 has been completed. Accordingly, now is a good time for buying.

Core principles of my analysis:

1. Wave structures should be simple and clear. Complex patterns are difficult to trade and often subject to change.
2. If there is no confidence in the market situation, it is better to stay out.
3. Absolute certainty about market direction is impossible. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.