The wave structure of the four-hour chart for EUR/USD is becoming more complex. There is still no question of canceling the upward trend segment (lower chart) that began in January last year. On the contrary, we have seen a complete corrective A-B-C structure, which may have been completed. However, recent events related to the Federal Reserve and its policy have once again affected the current wave structure. Let me remind you that the news background and wave structure often conflict with each other, making it necessary to adjust the wave analysis.

The wave structure may now once again become more complex. Wave C has taken a three-wave form, while the next wave is identified as wave D. The entire trend segment that began on January 27 may now take a five-wave corrective form, A-B-C-D-E. If this assumption is correct, wave D is complete, and on August 21, EUR/USD entered the phase of forming wave E, whose low should be below the low of wave C at 1.1325. Now there is only one question: will the news background support the dollar enough for the pair to fall below 1.1325? We get the answer to this question every day: no support from the news background is required.

The Trade Agreement Between China and the United States Did Not Affect the Market.

The EUR/USD rate declined by 10 basis points on Thursday and, in general, continues to lose ground almost every day. Thursday can certainly be called a significant day, as negotiations between China and the United States regarding the trade truce, which was due to expire on November 10, ended successfully. The truce was extended until January 10, 2027. In my view, the extension of the truce by two months is a rather questionable success, but relations between China and the United States remain tense, and peace remains fragile. Accordingly, even two additional months of calm are a positive factor.

U.S. Treasury Secretary Scott Bessent said after the negotiations that the additional time would give both sides an opportunity to assess their economic options, which could lead to a more comprehensive, longer-term, and mutually beneficial agreement next year. I would like to remind you that since Trump returned to the White House for a second term, a new trade war has broken out between China and the United States. Last year, import tariffs reached triple-digit levels, which could effectively have halted all trade between the two superpowers. However, the tariff rates were subsequently reduced, while China suspended its ban on rare-earth metal exports for one year. Nevertheless, tensions in relations between China and the United States persist. In particular, Donald Trump is demanding that Beijing end all dealings with Iran, while Beijing is demanding that Washington stop supporting Taiwan. The situation could flare up again at any time with renewed intensity.

General Conclusions.

Based on my EUR/USD analysis, I conclude that the pair remains within the framework of the global corrective trend segment A-B-C-D-E. If this assumption is correct, the decline in the exchange rate will continue toward targets below the low of wave C at 1.1325. I considered this scenario to be an alternative one, and if it had not been for the Fed meeting, it would have remained a reserve scenario. However, the Fed delivered a surprise, and the market was left with no other option but a new wave of U.S. dollar buying. However, buying has continued for several weeks, even though there are no new supportive factors for the dollar. I would not open short positions with such a news background.

On the higher time frame, an upward trend segment can be seen, followed by the formation of a corrective A-B-C structure. This structure may take a five-wave form, but at present, I consider it complete. If this is the case, a new impulsive upward trend segment has begun to form.

The Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often involve changes.
2. If there is no confidence in what is happening in the market, it is better not to enter the market.
3. There can never be 100% certainty about the direction of price movement. Do not forget to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.