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28.03.2025 08:10 PM
EUR/USD Analysis – March 28th

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The wave structure on the 4-hour chart for EUR/USD threatens to evolve into a more complex formation. A new downward structure began forming on September 25, taking the shape of an impulsive five-wave pattern. Two months ago, a corrective upward structure began, which should consist of at least three waves. The wave structure of the first wave was quite clear, so I continue to expect the second wave to take a defined form as well. However, the size of this wave is now so significant that it threatens to seriously alter the current wave count.

The news backdrop continues to support sellers more than buyers when it comes to economic data. All U.S. reports in recent months have shown one thing: the economy is not experiencing any serious problems and shows no signs of slowing to concerning levels. However, the U.S. economy could change dramatically in 2025 due to Donald Trump's policies. The Fed may cut interest rates more frequently, and tariffs (as well as retaliatory ones) could hit economic growth. If not for the latest developments, I would still expect the euro to decline with a 90% probability. But anything is still possible.

The EUR/USD pair rose by 60 basis points on Thursday. Friday started off quite optimistically for the U.S. dollar. Germany's unemployment rate increased, and the number of unemployed rose more than expected, which led to a drop in demand for the euro. However, at the beginning of the U.S. session, the PCE (Personal Consumption Expenditures) price index was released. And a mere 0.1% beat of the forecast was enough to trigger renewed dollar selling.

Undoubtedly, the primary reason behind the dollar's renewed decline was not the PCE index, but Donald Trump's new tariffs. His combative remarks toward any country planning retaliatory measures against the U.S. also added fuel to the fire. According to Trump, only he has the right to decide who can impose import tariffs and against whom — other countries, in his view, do not have this right. Therefore, any retaliatory sanctions from the European Union will be met with new U.S. tariffs. Clearly, things are not heading toward de-escalation, negotiations, or a trade deal. Naturally, demand for the U.S. dollar is falling again. The market has grown used to reacting to each new round of Trump tariffs by selling the dollar. So neither yesterday nor today saw anything surprising. Later today, markets will also see the U.S. consumer sentiment index, but I believe the dollar's decline this time will be short-lived.

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General Conclusions

Based on the current EUR/USD analysis, I conclude that the instrument is still in a downward trend segment, although it could soon shift to an upward one. A fresh rise in quotes may trigger a complete transformation of the entire wave structure. Since the wave count is currently challenged by the news backdrop, I cannot recommend selling the instrument — even though the current levels look extremely attractive for shorting, provided the wave picture remains intact. However, Donald Trump continues to exert pressure on the dollar, making the formation of wave 3 practically impossible.

On the higher wave scale, the wave structure has evolved into an impulsive pattern. We are likely looking at a new long-term bearish wave set, but the news background, especially coming from Donald Trump himself, has the power to turn everything upside down.

Key Principles of My Analysis:

  1. Wave structures should be simple and easy to understand. Complex patterns are hard to trade and often subject to change.
  2. If you're not confident in the current market situation, it's better to stay out.
  3. There is never 100% certainty about the market's direction. Always use Stop Loss protective orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.
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