The wave pattern on the 4-hour EUR/USD chart has remained consistent for several months. The upward trend segment continues to form, and the news backdrop continues to support all currencies except the U.S. dollar. The trade war initiated by Donald Trump was intended to increase budget revenues and reduce the trade deficit. However, these targets have yet to be achieved. Trade agreements are being signed slowly, and Trump's "One Big Law" is projected to raise the U.S. national debt by 3 trillion dollars over the coming years. Markets have given a low assessment of Trump's first six months in office, viewing his actions as a risk to U.S. stability and economic wellbeing.

Currently, wave 3 is likely still under construction and may eventually extend much further. However, its internal structure has taken on a five-wave form, which could mean it is complete. If the current wave count is accurate, then prices may continue to rise in the coming months. In the short term, however, a corrective wave sequence may form. The U.S. dollar will remain under pressure unless Donald Trump completely reverses his trade policy. The likelihood of that happening is very low, though Trump is known for being unpredictable.

The EUR/USD rate showed no significant change on Tuesday. The euro has been gradually declining for more than a week, and market behavior suggests that investors are pausing and locking in profits rather than buying the dollar. Broadly speaking, conditions in the currency market remain unchanged. New data comes in, older data fades, but the overall picture stays the same. The market had no interest in buying the dollar one month ago or three months ago, and that sentiment persists—largely because the global trade war shows no signs of nearing resolution.

Moreover, some anticipate a resolution to the trade war, but such an outcome remains uncertain. A complete end to the trade conflict would, in my view, require the full removal of all tariffs. This scenario does not appear likely under Donald Trump. As a result, the most realistic outcome may be a reduction in tariffs for most U.S. trading partners. However, considering that only 3 agreements have been signed out of 75 after three months of negotiations, the likelihood of even this outcome seems low.

It's also worth noting that three months ago, Trump effectively lowered tariffs to minimal levels. Did that help the dollar? The market viewed it as a temporary move and anticipated future increases. Even the three signed agreements imply substantially higher tariffs for China, Vietnam, and the United Kingdom than the standard 10%. Today, Trump announced tariff hikes to 25–40% for 15 countries on his list. These increases will take effect on August 1, and much can still happen before then. Still, the focus remains on further tariff hikes.

Based on all of the above, new tariffs and tariff increases continue to be a reason for markets to sell the dollar. Tariff reductions and trade deals do not appear to boost demand for the dollar.

Key Takeaways

Based on this EUR/USD analysis, I conclude that the pair continues to form an upward trend segment. The wave count remains entirely dependent on the news background related to Trump's decisions and U.S. foreign policy, with no clear signs of improvement. The target for wave 3 may extend to the 1.2500 level. I continue to view long positions with targets near 1.1875, which corresponds to the 161.8% Fibonacci level. In the near term, a corrective wave sequence may emerge. New long positions should be considered once this correction is complete.

Core Principles of My Analysis

1. Wave structures should be simple and clear. Complex patterns are harder to trade and often subject to change.
2. If there is uncertainty about market conditions, it is better to stay out.
3. Full confidence in market direction is never possible. Always use Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.