The wave pattern on the 4-hour chart for EUR/USD continues to indicate the formation of an upward trend segment. Until February 28, when the decline of the U.S. dollar began, the entire wave structure appeared to be a convincing downward trend, building corrective wave 2. However, the trade war launched by Donald Trump, intended to boost budget revenues and reduce the trade deficit, has so far worked against the U.S. dollar. Demand for the dollar has rapidly declined, and now the entire trend segment that began on January 13 has taken on an impulsive bullish form.

Currently, wave 3 in 3 is presumably still developing, which may become much more extended than it currently appears. If the current wave pattern is correct, the upward movement in quotes may continue over the coming weeks and months. However, the dollar will remain under pressure only if Donald Trump does not reverse his trade policy by 180 degrees. The chances of that are extremely low, but anything could happen by July 9. Realizing the futility of his actions, Trump may decide to grant a general amnesty and claim he doesn't want to harm anyone.

EUR/USD lost another 60 basis points on Thursday and may drop a full 100 before the end of the day. What confidence can there be in the dollar now? This week alone has brought a multitude of events indirectly pushing market participants to sell the dollar. First, the geopolitical conflict in the Middle East came to an end. With it gone, the dollar lost its "safe haven" appeal. Second, Donald Trump has been criticizing Jerome Powell for three days straight, threatening to fire him and suggesting possible replacements. In other words, the U.S. President is openly in conflict with and insulting the FOMC Chair. Can there be confidence in a country where such events are possible? Can investors trust the currency of such a country?

Third, trade negotiations have yielded nothing. After 2.5 months of talks, during which Trump expected "fantastic offers" and "numerous beneficial deals," only one trade agreement with the UK has been signed. Perhaps by July 9, there will be 10 or 20 agreements, but they won't include China or the European Union. Just a week ago, officials in Brussels stated that they don't even understand what Washington wants. EU officials consider Trump's demands unrealistic. What kind of deal can be made under such conditions?

Fourth, the final Q1 U.S. GDP report was released today. Although the second preliminary estimate was better than the first, the final reading showed a 0.5% slowdown. Demand for the U.S. currency can easily continue declining day by day.

General Conclusions

Based on the EUR/USD analysis, I conclude that the pair continues to build a bullish trend segment. The wave pattern remains entirely dependent on the news background related to Trump's decisions and U.S. foreign policy, where no positive changes have yet occurred. The targets for wave 3 could extend as far as the 1.25 area. Accordingly, I continue to consider buying positions with initial targets around 1.1708, which corresponds to the 127.2% Fibonacci level. A de-escalation of the trade war could reverse the uptrend, but currently, there are no signs of either reversal or de-escalation.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex patterns are hard to interpret and often prone to change.
2. If you're unsure about what's happening in the market, it's better to stay out.
3. There can never be 100% certainty about market direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.