The wave pattern on the 4-hour chart for EUR/USD has remained unchanged for several months, which is encouraging. Even when corrective waves form, the overall structure is preserved. This allows for accurate forecasts. It should be noted that the wave pattern does not always look textbook-like. At present, however, it looks very clear.

The formation of the upward trend segment continues, while the news background continues to support mostly not the dollar. The trade war initiated by Donald Trump continues. The confrontation with the Fed continues. Market "dovish" expectations are growing. Trump's "One Big Law" will add 3 trillion dollars to the U.S. national debt, and the U.S. president is regularly raising tariffs and introducing new ones. The market evaluates the results of Trump's first 6–7 months very poorly, even though economic growth in the second quarter reached 3%.

At this point, it can be assumed that wave 4 has been completed. If that is indeed the case, then the formation of impulse wave 5 has begun, with targets extending up to the 1.2500 level. Of course, the corrective structure of wave 4 may still take on a longer, five-wave form, but I am proceeding from the most likely scenario.

The EUR/USD exchange rate barely changed on Wednesday, while on Tuesday it lost as much as 50 points. I am surprised by such a drop in EUR/USD, although in fact it has no real impact and does not change anything. The formation of the upward trend segment, which began in January 2025, continues. The construction of the expected wave 5 of this trend segment continues. The wave pattern raises no doubts or questions. The market's sluggishness is somewhat discouraging, but demand for the U.S. currency is nonetheless falling, which is the desired outcome.

Last week, reports on business activity, unemployment, and the labor market were released in the U.S. Tomorrow, the Consumer Price Index will be published. Let me remind readers that the Fed now focuses on three indicators, which the FOMC will take into account when making monetary policy decisions: inflation, unemployment, and the labor market. The three pillars of the economy. The labor market and unemployment reports showed results no one wanted to see, which increased the already 100% probability of a rate cut in September. And tomorrow, the inflation report will be released, which may at least slightly soften the dovish expectations that bode ill for the U.S. currency.

But for that to happen, U.S. inflation in August would need to grow no stronger than forecasts, remain flat, or even decline. Should one expect such a scenario? Today, the U.S. Producer Price Index, which is part of the overall inflation gauge, was released. In August, producer prices fell by 0.1% versus a forecast of +0.3%. This does not necessarily mean that headline inflation will also slow. Last month, producer prices jumped almost 1%, which has not yet been reflected in the inflation data. Therefore, I tend to believe that the Consumer Price Index will rise in August to at least 2.9% year-on-year.

General conclusions

Based on the EUR/USD analysis, I conclude that the instrument continues to form an upward trend segment. The wave pattern remains entirely dependent on the news background tied to Trump's decisions and the foreign and domestic policy of the new Administration. The targets of the trend segment may extend up to the 1.2500 level. Accordingly, I continue to consider buying with initial targets around 1.1875, which corresponds to the 161.8% Fibonacci level, and higher.

Key principles of my analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often lead to changes.
2. If there is no confidence in what is happening on the market, it is better not to enter.
3. Absolute certainty in the direction of movement never exists. Always remember protective Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.