EUR/USD Analysis on January 8, 2026

[Ben Graham]

The 4-hour chart wave structure of EUR/USD has been quite clear, though rather complex in recent months (see lower chart). There is no question of canceling the upward trend that began in January of last year, but the wave structure starting from July 1, 2025, has become complex and extended. In my view, the instrument has completed the construction of corrective wave 4, which took a very unusual form. Within this wave, we observed exclusively corrective structures, leaving no doubt about its corrective nature.

In my opinion, the upward trend is not yet complete, and its targets extend up to the 25th level. In the coming weeks, we can expect a continuation of the upward wave sequence, which could take a five-wave form. However, there is no certainty that an impulsive segment of the trend is currently forming, so the entire upward wave sequence could instead form a three-wave structure. In that case, a new downward segment may already be starting, which would also be corrective.

EUR/USD continued a weak decline throughout Thursday, and meanwhile, a paradoxical situation has emerged in the market. The US dollar's strengthening over the past two weeks has not been strong enough to be considered a welcoming reaction to Donald Trump's geopolitical ambitions. Yet at the same time, the US currency is rising, even though Trump is again doing everything possible to make the world abandon the dollar. What does this movement mean?

Primarily, it reflects uncertainty—market uncertainty in its own decisions and expectations. On one hand, Trump's actions are difficult to interpret positively. On the other, investors favor strong leaders because they represent strong countries, and strong countries generally have strong, stable economies. As a result, the market is conflicted between two forces, leaving the dollar in a difficult and uncertain situation. Forex market participants understand that Trump's military aggression will clearly not stop at Venezuela. If the escalation of Trump's military plans spreads to Latin America, the Middle East, and Europe, it would resemble an Orwellian division of the world. Investors simply do not know how to react to such a "redistribution of property" and spheres of influence. This helps explain the US dollar's weak growth.

It should also be remembered that tomorrow, the US will release the Nonfarm Payrolls and unemployment rate reports, and the market is hesitant to make trading decisions because it is uncertain what to expect. On one hand, the first labor market reports (ADP and JOLTS) showed weak readings. On the other hand, this does not mean that the Nonfarm Payrolls and unemployment reports will also be weak.

General Conclusions

Based on my EUR/USD analysis, I conclude that the instrument continues the construction of the upward trend. Donald Trump's policies and the Fed's monetary policy remain significant factors for the long-term decline of the US dollar. Targets for the current trend segment may extend up to the 25th level. The current upward wave sequence may be complete, which means a decline could be expected soon. However, the trend segment that began on November 5 could still take a five-wave form. US economic data released this week may support this.

On a smaller scale, the entire upward trend segment is visible. The wave structure is not entirely standard, as corrective waves vary in size. For example, the larger wave 2 is smaller than the internal wave 2 within wave 3. However, such cases do occur. I would like to remind that it is better to identify clear structures on charts rather than strictly adhere to every wave. Currently, the upward structure is beyond doubt.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often undergo changes.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There is no such thing as 100% certainty in the direction of movement—never. Always remember protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

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