The wave structure of the EUR/USD four-hour chart has become more complex. On the higher time frame (lower chart), the downward trend segment has taken the form of a five-wave structure, A-B-C-D-E, which may be complete at any moment, as it appears to be fully developed. All the waves within this segment are approximately equal in size, which is why this structure is considered corrective. If this assumption is correct, a new upward impulsive trend segment will begin once the correction is complete, with targets well above the 20.00 level.
On the lower time frame (upper chart), an impulsive wave sequence is still developing and may belong to wave E of the higher time frame. If this is indeed the case, the dollar's strengthening is nearing its end, regardless of how much further it may rise. The expected wave 5 of E is either complete or close to completion. In any case, the current wave structure suggests that the downward wave sequence is nearing completion on both charts. News developments and a sharp shift in market sentiment have led to a significant rise in the US dollar, but there are few remaining reasons for further dollar appreciation.
The Market Is Focused on the Elections
The EUR/USD exchange rate remained virtually unchanged throughout Tuesday but managed to rise by 70 points during Wednesday's overnight trading session. At present, demand for the US dollar continues to decline. Clearly, the US congressional elections are the main factor behind the dollar's weakness. The first results from polling stations began coming in several hours ago, indicating a decisive lead for the Democrats. The election results will be discussed in greater detail later, but for now, attention should be paid to the economic data scheduled for release by the end of this week.
Yesterday, the first in a series of US labor market reports was released. The number of JOLTS job openings in September stood at 7.5 million, while the market had expected no more than 7.1 million. However, this report should not be considered particularly important, as it is difficult to draw firm conclusions from it. First, it is released with a two-month lag. Second, job openings do not automatically translate into actual hiring. What matters for the economy is how many people ultimately find employment and remain in their jobs over an extended period. Therefore, the JOLTS report is just one component of the broader labor market picture. An increase in job openings is a positive development, but market participants paid little attention to the data yesterday because more important issues are currently in focus.
Today, the eurozone inflation report will be released, and it may affect both market sentiment and the ECB's outlook. Overall, the ECB has maintained a hawkish stance, and interest rates are expected to be raised in December for the third time in 2026. If the market takes this into account, demand for the euro may continue to increase. A Democratic victory in the elections could also support EUR/USD, giving the European currency a favorable outlook for the development of a new upward trend segment.
General Conclusions
Based on the EUR/USD analysis, the pair remains within the global corrective trend segment A-B-C-D-E. However, this structure appears to be fully developed and may therefore be complete. In the current situation, conditions look favorable not only for buying the euro but also for anticipating the development of a sustained upward trend segment. According to the higher time frame, the exchange rate is expected to rise to at least the 1.17–1.18 level. The failed attempt to break above 1.1126, corresponding to the 50.0% Fibonacci retracement level (lower chart, higher time frame), also indicates that the market may be preparing to move higher.
The higher time frame shows a downward trend segment that has taken the form of an A-B-C-D-E structure. The internal wave structure of wave E has developed into a five-wave impulse pattern, which may already be complete. If this assumption is correct, a new upward trend segment is now likely to begin.
Key Principles of the Analysis:
- Wave structures should be simple and easy to understand. Complex structures are difficult to trade and often involve changes in the expected market scenario.
- If there is no clear understanding of current market conditions, it is better to stay out of the market.
- There can never be complete certainty about the direction of price movement. Protective Stop Loss orders should always be used.
- Wave analysis can be combined with other types of analysis and trading strategies.
