EUR/USD Analysis on September 26, 2025

[Ben Graham]

The wave pattern on the 4-hour chart of EUR/USD has remained unchanged for several months, but in recent days it has started to look more complex. It is still too early to conclude that the upward trend segment has been canceled, but a more complicated wave structure in the near term is quite possible.

The upward trend segment is still in progress, while the news backdrop continues to support, for the most part, not the dollar. The trade war initiated by Donald Trump continues. The standoff with the Fed persists. Market expectations of a dovish Fed stance are growing. Market assessments of Trump's first 6–7 months in office are rather low, even though GDP growth in the second quarter was close to 4%.

At present, it can be assumed that the formation of impulse wave 5 is ongoing, with potential targets extending as far as the 1.25 level. The internal structure of this wave is fairly complex and ambiguous, but at the larger scale it raises few doubts. Three upward waves are visible, which suggests the pair has moved on to forming wave 4 within wave 5, taking the shape of a three-wave correction. A stronger decline in quotes would require adjustments to the current wave pattern.

The EUR/USD exchange rate barely moved on Friday, and even the U.S. news backdrop did not affect market sentiment. It should be noted that the past week was extremely positive for the dollar. I have previously emphasized that ideally, wave patterns should not conflict with the news backdrop. Otherwise, one type of analysis will lead to misleading conclusions. Over the past week, the news flow has supported the U.S. currency, and at this point the dollar's strengthening has made the wave structure appear more complex.

What alternative scenarios are possible? In my view, only one. The segment now marked as wave 4 is three-wave in nature. This means it is, in any case, a corrective wave at a higher scale. The next segment, identified as wave 5, should be a five-wave formation. However, it is currently impossible to identify five complete waves within it to declare it finished. Therefore, either the pair will resume its upward movement from current levels within wave 5 of 5, or the entire trend segment that began on July 1 will change its internal form.

Let me remind you that wave structures can take almost any form, and wave analysis provides an interpretation for each of them. However, I do not like analyzing complex structures. Complex formations usually emerge from simple ones, which makes it much harder to set targets compared to the classic "five waves up, three waves down." Therefore, if the current wave pattern transforms into a more complicated one, it will be very unfavorable for traders. Unfortunately, the news flow has had a very negative impact on the wave picture in recent days.

General Conclusions

Based on the EUR/USD analysis, I conclude that the pair continues to build an upward trend segment. The wave structure still depends entirely on the news backdrop related to Trump's decisions, as well as the domestic and foreign policies of the new White House administration. The targets of the current trend segment may extend up to the 1.25 level. At present, the pair is declining within corrective wave 4, while the upward wave structure remains valid. Therefore, in the near term, I consider only buying opportunities. By year-end, I expect the euro to rise to 1.2245, which corresponds to 200.0% on the Fibonacci scale.

At a smaller scale, the entire upward trend segment is visible. The wave pattern is not very standard, as the corrective waves differ in size. For example, senior wave 2 is smaller than internal wave 2 within wave 3. However, such cases do occur. I would note that it is best to identify clear structures on the chart, without the need to account for every minor wave. At present, the upward structure raises almost no questions.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often bring changes.
2. If there is no confidence in market developments, it is better to stay out.
3. Absolute certainty in market direction never exists. Always use 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