The wave pattern on the 4-hour EUR/USD chart continues to indicate the development of an upward trend segment. This transformation occurred solely due to the new U.S. trade policy. Until February 28, when the decline of the U.S. dollar began, the entire wave structure appeared as a convincing downward trend, forming a corrective wave 2. However, the trade war initiated by Donald Trump—meant to increase budget revenues and reduce the trade deficit—has so far worked against the dollar. Demand for the greenback began to fall sharply, and now the entire trend segment starting on January 13 has taken on an impulsive upward form.

At present, wave 3 within wave 3 is presumably continuing to build. If this is indeed the case, price increases are likely to persist in the coming weeks and months. However, the U.S. dollar will remain under pressure unless Donald Trump completely reverses his adopted trade policy—a highly unlikely scenario. At this time, there is no basis for expecting strong growth in the dollar.

The EUR/USD rate rose by 50 basis points on Monday, even though there was no economic news, and all non-economic headlines concerned the conflict between Iran and Israel. In short, both countries continue launching missile attacks without much concern for civilians. In the past, a new geopolitical conflict—or an outright war—would have significantly boosted demand for the U.S. dollar as a safe-haven asset, at least initially. This time, however, we saw the dollar strengthen by just 100 basis points—and that was the end of the market's appetite for the greenback.

I see no signs that market sentiment is changing. Think about it: the dollar has been falling for four months straight, all while the Fed has held the rate steady at 4.5%, and the ECB has already carried out four rounds of monetary easing. Add to that the Iran–Israel war, which has already driven up oil prices—and the dollar is still falling. What happens if the Fed, fearing a recession and higher import tariffs from Donald Trump, resumes monetary easing?

I believe demand for the U.S. dollar could drop further on Wednesday evening. The FOMC is unlikely to lower the rate, but Jerome Powell's rhetoric could become notably softer compared to previous meetings. And even a slightly dovish shift would likely be enough for the market to resume selling the dollar. Any hint from Powell at a more accommodative policy in the second half of the year would be a potential death sentence for a currency that, in 2025, hasn't managed to benefit even from positive developments. Frankly, at the beginning of this new week, I see no reason to expect the dollar to rise.

Conclusions

Based on the EUR/USD analysis, I conclude that the pair continues to build an upward trend segment. The wave structure remains fully dependent on the news flow related to Trump's decisions and U.S. foreign policy. The targets of wave 3 may extend as far as the 1.25 level. Therefore, I am considering long positions with targets near the 1.1708 level, which corresponds to 127.2% on the Fibonacci scale and higher. A de-escalation of the trade war could reverse the uptrend, but at this time, there are no signs of either a reversal or de-escalation.

On the higher time frame, it's clear that the wave structure has shifted to bullish. A long-term upward sequence of waves is likely ahead, although news—especially from Donald Trump—could easily turn the market upside down once again.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex patterns are difficult to trade and often involve unexpected changes.
2. If you're uncertain about what's happening in the market, it's better not to enter it.
3. There is never 100% certainty about the market's direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.