EUR/USD Technical Analysis and Geopolitical Outlook

EUR/USD Wave Analysis

The 4-hour chart for EUR/USD indicates a transition toward a more complex wave structure. While the broader upward trend initiated in January of last year remains technically intact, the current price action exhibits a corrective pattern. From a long-term perspective, market participants are monitoring the potential development of wave C, which could see price levels decline below the lows established in wave A.

Geopolitical Factors Impacting Sentiment

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Geopolitical tensions in the Middle East have re-emerged as a primary driver of market volatility. Following reports of a renewed blockade of the Strait of Hormuz by Iran, demand for the U.S. dollar has strengthened. Diplomatic uncertainty between Tehran and Washington, exacerbated by threats of potential military intervention, continues to inject risk premium into the USD, putting downward pressure on the euro.

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Technical Outlook and Targets

On the lower time frame, a bearish five-wave structure is currently under observation. Once this sequence concludes, the potential for a recovery toward a new upward wave sequence exists. However, in the immediate term, the pair remains susceptible to further downside, with technical targets aligned near the 1.1352 level, representing the 38.2% Fibonacci retracement.

Strategic Considerations

Despite the current bearish pressure, the ongoing upward trend remains the primary reference on higher time frames. Traders should exercise caution, as a move below the 1.1400 level may be required to finalize the corrective wave C before a potential long-term reversal. Given the prevailing uncertainty, maintaining protective stop-loss orders is essential to manage exposure during this volatile period.

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