In this review, we will analyze the movements of the EUR/USD instrument in the fall of 2025. Why do I consider the autumn period important for the prospects of the American currency? Because, in my opinion, the market was dominated by corrective sentiments that did not always align with the news backdrop and wave formations. To be honest, if, after completing another global bullish wave, the EUR/USD instrument had formed a minimal set of corrective waves, nobody would have opposed it, nor would anyone have been surprised. However, instead of the classic “three,” we saw a whole series of corrective structures lasting five or six months. The correction was weak but prolonged and exhausting.
Throughout the autumn, the market continued trading horizontally, although there were plenty of reasons to sell the dollar. Let’s analyze the situation. Firstly, the “shutdown.” Who among my readers can say that a “shutdown” is a positive event for the American economy? Indeed, it is not about a 1% or 2% slowdown in the economy due to this event, but it can hardly be called positive. However, throughout the “shutdown” period, demand for the U.S. currency increased.
Secondly, the Fed eased monetary policy twice in the fall. The anticipated wave “c” in 4 began after the September Fed meeting, and the inner wave “e” in “c” in 4 started after October. In both cases, the instrument declined, indicating increased demand for U.S. currency. Based on this, I believe the “shutdown” and the two rounds of easing were not fully reflected in market prices. In mid-December, the FOMC conducted the third consecutive round of easing, after which demand for the U.S. currency began to decline.
Given that the prospects for the U.S. labor market recovery are rather bleak and inflation slowed to 2.7% year-over-year in November, I do not rule out a fourth round of easing in January. Certainly, Jerome Powell and some of his colleagues have discussed the need to pause in recent weeks, but we have yet to see the December data on unemployment, payrolls, and inflation. What if the labor market cools again, the unemployment rate rises, and inflation decreases?
Wave Structure of EUR/USD:
Based on the conducted analysis of EUR/USD, I conclude that the instrument continues to build the bullish segment of the trend. Donald Trump’s policies and the Fed’s monetary policy remain significant factors in the long-term decline of the American currency. The targets of the current trend segment may stretch up to the 25th figure. The current upward wave pattern is starting to show development, and it is hoped that we are now witnessing the formation of an impulse wave set that is part of the global wave 5. In this case, we should expect growth towards targets around 1.1825 and 1.1926, corresponding to 200.0% and 261.8% on the Fibonacci retracement.
Wave Structure of GBP/USD:
The wave structure of the GBP/USD instrument has changed. The downward corrective structure a-b-c-d-e in C of 4 appears to be complete, as does the entire wave 4. If this is indeed the case, I expect the primary trend segment to resume its development, with initial targets around the 38 and 40 levels.
In the short term, I anticipated the formation of wave 3 or c, with targets around the 1.3280 and 1.3360 marks, corresponding to 76.4% and 61.8% on the Fibonacci retracement. These targets have been reached. Wave 3 or c continues its formation, and currently, a fourth attempt to break the 1.3450 mark (equating to 61.8% on the Fibonacci retracement) is underway. Movement targets are 1.3550 and 1.3720.
Core Principles of My Analysis:
- Wave structures should be simple and understandable. Complex structures are difficult to trade and often require adjustments.
- If there is uncertainty about what is happening in the market, it is better not to enter it.
- There is never 100% certainty in the direction of movement, and there never can be. Don’t forget about protective stop-loss orders.
- Wave analysis can be combined with other forms of analysis and trading strategies.
