EUR/USD Technical Analysis: Focus Shifts to US Nonfarm Payrolls

Market Overview and Trend Structure

The EUR/USD 4-hour chart indicates that while the long-term upward trend initiated in early 2025 remains technically valid, the internal structure has shifted into a corrective phase. Current analysis suggests the development of a wave C sequence, which may eventually test levels below 1.1400. While such a significant decline remains speculative, geopolitical instability continues to influence currency valuations.

Wave Analysis and Near-Term Outlook

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Short-term price action displays a classic three-wave bullish correction that has now transitioned into a downward sequence. This pattern is projected to form a five-wave structure within the higher-degree wave C. If the current wave count holds, traders should monitor for bearish momentum toward the 1.1352 area, which aligns with the 38.2% Fibonacci retracement level.

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Economic Catalysts and Nonfarm Payrolls

Market attention turns to today's U.S. Nonfarm Payrolls and unemployment rate data. Although labor market reports were previously primary indicators for Federal Reserve policy, inflation pressures stemming from regional geopolitical conflicts have recently gained prominence. Consequently, the Fed may prioritize inflation metrics—with May data due next Wednesday—over marginal shifts in employment figures.

Monetary Policy Considerations

The Federal Reserve faces a challenging environment as it navigates the balance between accelerating inflation and maintaining labor market stability. A premature interest rate hike could risk economic cooling, yet persistent inflationary pressure may leave the regulator with few alternatives. The market is currently cautious, as demonstrated by the limited trading range of EUR/USD during recent sessions.

Strategic Conclusions

Technical indicators suggest that the EUR/USD pair is currently developing wave 5 within a broader corrective structure. While a decline toward 1.1352 is anticipated, the completion of this bearish sequence depends heavily on future geopolitical developments. Traders are advised to prioritize risk management, as the potential for truncated wave structures or abrupt market shifts remains high in the current climate.

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