Euro Currency. Weekly Preview

[Ben Graham]

The European currency will start the upcoming week in a very interesting position. Demand for the US dollar has been increasing over the past few weeks, but the market has not always given the news background the attention it should. In other words, the US currency has risen somewhat undeservedly, at least from my point of view. What has driven this growth? I believe it stems from the necessity to establish a complete three-wave correction.

Currently, the downward wave set has evolved into a three-wave structure after forming a five-wave structure. Therefore, it is considered complete. Is the market ready to purchase the euro again? In my opinion, yes. My hypothesis should be confirmed or refuted by the level of 1.1746, which corresponds to the 61.8% Fibonacci. A failed attempt to break through this level could lead not only to a price retracement from the recent lows but also to the formation of an entire series of waves. If my assumption is incorrect, the level will likely be breached with the second or third attempt, and then alternative scenarios will need to be considered.

The news background for the EUR/USD instrument is currently more influenced by American political and trade events than by European ones. The market did not have the opportunity to react to the events of Friday and Saturday, so I do not exclude the possibility that next week will be dominated by Trump's refusal to lift tariffs, to return collected payments to American companies and workers, as well as new trade tariffs of 15% for all countries.

In Europe, next week will see a speech by ECB President Christine Lagarde, and multiple reports will be released in Germany, including unemployment rates and the consumer price index, as well as the final inflation value for the Eurozone for January. However, I believe the market will primarily focus on American events.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to build an upward trend segment. Donald Trump's policies and the Fed's monetary policy remain significant factors in the long-term decline of the US currency. The targets for the current segment of the trend may reach the 25-figure mark. At this moment, I believe the instrument remains within the global wave 5, so I expect the quotes to increase in the first half of 2026. The corrective structure a-b-c may be completed at any moment, as it has already taken on a convincing form. I believe it is now advisable to look for areas and levels for new purchases with targets around marks of 1.2195 and 1.2367, which correspond to 161.8% and 200.0% on the Fibonacci.

Wave Picture for GBP/USD:

The wave picture for the GBP/USD instrument looks quite clear. The five-wave upward structure has completed its formation, but the global wave 5 may take on a much more extended form. I believe the corrective wave set will end soon, after which the upward trend will resume. Therefore, I would recommend looking for opportunities for new purchases with targets above the 39-figure. In my view, under Trump, the British pound has a good chance of rising to $1.45-$1.50.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often entail changes.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty in the direction of movement. Don't forget about 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