EUR/USD Analysis on October 27, 2025

[Ben Graham]

The wave pattern on the 4-hour chart for EUR/USD has changed, unfortunately not for the better. It is still too early to conclude that the upward section of the trend has been invalidated, but the recent decline in the euro necessitated a revision of the wave structure. We now see a series of three-wave structures, a-b-c, which could be part of the larger Wave 4 of the upward trend. In this case, Wave 4 appears unnaturally extended, but overall, the wave structure retains its integrity.

The upward trend development continues, and the news flow largely remains unsupportive of the U.S. dollar. The trade war initiated by Donald Trump continues. The president's confrontation with the Fed is ongoing. Market expectations for a dovish Fed are rising. In the U.S., the government shutdown persists, and the labor market continues to cool.

In my view, the upward trend is not yet complete, with targets scattered up to the 25th figure. As a result, the euro may decline for a while, seemingly without reason (as it has over the past three weeks), but the wave analysis still points to higher prices.

The EUR/USD pair rose only slightly on Monday, and volatility remains disappointing. Over the past week, my readers have become accustomed to low market activity, and the start of the new week has changed nothing—though it could have.

Just yesterday evening, it was reported that China and the U.S. agreed on the terms of a trade deal, but various sources clarified that this is not a comprehensive agreement; rather, it is an extension of the trade truce. In other words, negotiations on the final deal continue, and whether Beijing and Washington will reach an understanding remains uncertain. In my view, the likelihood of a finalized agreement is still low, for one simple reason: Donald Trump.

I have repeatedly noted in my reviews that Trump could impose new tariffs on China immediately after signing any hypothetical deal, under any pretext. He just needs a reason—or to invent one—and he can introduce tariffs, demand concessions, and extract more money for the U.S. treasury. Therefore, I believe that the U.S.–China trade war will be perpetual—a war for the sake of war, Orwell-style. Sometimes it will flare up, sometimes cool down, but Trump will continue pressuring China by all means, as he sees China as the main rival for global dominance. The market, by the way, has barely reacted to any warming of relations between the two countries.

Conclusions

Based on the analysis of EUR/USD, I conclude that the pair continues to build the upward section of the trend. Currently, the market is in a pause, but Trump's policies and Fed decisions remain significant factors keeping the U.S. dollar under pressure. Targets for this section of the trend may extend up to the 25th figure.

At present, we are observing the formation of corrective Wave 4, which appears complex and elongated. Therefore, I continue to favor long positions. By the end of the year, I expect EUR/USD to rise toward 1.2245, corresponding to 200% Fibonacci extension.

On a smaller scale, the entire upward trend is visible. The wave structure is non-standard, as corrective waves vary in size. For example, the larger Wave 2 is smaller than the internal Wave 2 of Wave 3. However, such variations are normal. It is important to identify clear structures on charts, rather than trying to label every single wave. At present, the upward structure is largely unambiguous.

Key Principles of My Analysis

1. Wave structures should be simple and clear. Complex structures are harder to trade and often change unexpectedly.
2. If you are unsure of the market situation, it's better not to enter.
3. There is no 100% certainty in market direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com