empty
03.01.2025 05:38 PM
Analysis for EUR/USD on January 3, 2025

This image is no longer relevant

The wave structure of the 4-hour chart for EUR/USD is becoming increasingly clear and interesting. Since January 2024, I can identify only two three-wave patterns (a-b-c) with a turning point on April 16. After completing the upward wave structure, a new downward structure began forming, which has the potential to become impulsive. If this proves to be the case, a more convincing fifth wave is expected to form, after which the pair could transition to constructing a prolonged and complex corrective structure.

Overall, the current wave analysis seems straightforward and clear. I would like to remind you that market fundamentals can be misleading for one, two, or even three months, but not indefinitely. Recent US reports showed that the economy is not facing severe issues. There is no recession, and it is unlikely to occur. The economy may slow down, but its current growth rates allow it to navigate this period without significant losses. The Federal Reserve is expected to ease policy slower and less aggressively than the market anticipated at the beginning of the year. Conversely, the ECB sees no reason to stop easing and will likely continue.

On Friday, the EUR/USD pair gained 30 basis points. This rise is negligible compared to yesterday's drop in the euro, marking another decline in recent months. I believe the new fall in the euro was predictable, given the overwhelming factors weighing on the EU currency, which are hard to ignore. I still think the recent market movements reflect a reaction to unmet expectations. In 2024, the market anticipated 6–7 rounds of Federal Reserve monetary easing but only got three. In 2025, expectations were clearly higher than the two 25-basis-point cuts that have been announced. Thus, a "dovish" scenario was priced into the dollar, and now the market seems to be recalibrating.

No news yesterday provided strong support for the dollar, nor were there reports today that would fail to support the US currency. German unemployment data released today showed neutral results, with unemployment levels unchanged and figures aligning with market expectations. Later today, the ISM Manufacturing PMI for the US will be released, providing the final piece of data for the first week of 2025. Significant market fluctuations are possible during the final trading hours of the week. However, these fluctuations will not negate the fact that demand for the dollar has been growing for over three months—a fully justified market reaction.

This image is no longer relevant

General Conclusions

Based on the EUR/USD analysis, I conclude that the pair continues to build a new downward trend segment. The unsuccessful attempt to break the 1.1184 level signaled the beginning of a series of downward waves. Three failed attempts to break the 200.0% Fibonacci level indicated readiness for the fifth wave, targeting as low as the 1.02 range. Yesterday, the pair entered the 1.02 range, and the fifth wave could conclude at any moment.

At a higher wave scale, it is evident that the wave structure is evolving into a more complex formation, primarily consisting of corrective waves. A new set of downward waves is likely, but its length and structure remain challenging to predict at this stage.

Key Principles of My Analysis:

  1. Wave structures should be simple and clear. Complex structures are hard to trade and often require adjustments.
  2. If you are uncertain about market conditions, it is better to stay out.
  3. There is no such thing as 100% certainty in market direction. Always use Stop Loss orders for protection.
  4. Wave analysis can be combined with other types of analysis and trading strategies.
Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Analysis for GBP/USD on March 21, 2025

The wave structure for GBP/USD remains somewhat ambiguous, but overall manageable. At present, there's still a high probability of a long-term downward trend developing. Wave 5 has taken

Chin Zhao 18:42 2025-03-21 UTC+2

Analysis for EUR/USD on March 21, 2025

The EUR/USD pair saw no change on Friday. There was no news background in the direct sense of the word today, so the market had nothing to respond

Chin Zhao 18:39 2025-03-21 UTC+2

Analysis for EUR/USD on March 20, 2025

The wave structure on the 4-hour chart for EUR/USD is at risk of transforming into a more complex formation. A new downtrend structure started forming on September 25, which took

Chin Zhao 18:37 2025-03-20 UTC+2

GBP/USD Analysis – March 18th

The wave structure for GBP/USD remains somewhat ambiguous yet generally clear. At present, there is a high probability that a long-term downward trend is forming. Wave 5 has taken

Chin Zhao 18:45 2025-03-18 UTC+2

EUR/USD Analysis – March 18th

The wave structure on the four-hour chart is at risk of transforming into a more complex formation. A new downward wave structure began forming on September 25, taking the shape

Chin Zhao 18:43 2025-03-18 UTC+2

EUR/USD Analysis – March 17th

The 4-hour wave analysis for EUR/USD is at risk of transforming into a more complex structure. A new downward trend began on September 25, taking the form of a five-wave

Chin Zhao 17:34 2025-03-17 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for GBP/USD, AUD/USD, USD/CHF, EUR/JPY, #Ethereum, and #Litecoin – March 17th

GBP/USD Since January, an upward wave has been forming on the GBP/USD chart. The wave structure analysis shows that this wave remains incomplete. After breaking through another resistance level

Isabel Clark 09:34 2025-03-17 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, #Bitcoin, and #Ripple – March 17th

Since February 3 of this year, the chart of the euro has been forming an upward wave zigzag. The wave structure analysis indicates that a correction is forming

Isabel Clark 09:23 2025-03-17 UTC+2

Weekly Forecast BasSimplified Wave Analysis for GBP/USD, AUD/USD, USD/CHF, EUR/JPY, Ethereum, and Litecoin on March 10th

Analysis:The upward wave that started on January 13th remains incomplete, forming a new segment of the dominant global uptrend. The pair is currently trading within a narrow range between opposing

Isabel Clark 09:26 2025-03-10 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, GOLD, and Bitcoin on March 10th

Analysis:Since early February, the euro has been forming an upward zigzag wave, marking the beginning of a new bullish trend. The pair has reached a significant potential reversal zone

Isabel Clark 09:20 2025-03-10 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.