EUR/USD Analysis: Wave E Nears Completion as USD Momentum Fades

The EUR/USD currency pair is showing signs of finalizing its broader downward corrective trend. On the higher timeframe, price action has developed into a well-defined five-wave A-B-C-D-E corrective structure. Because the individual sub-waves within this segment display equal proportions, the pattern appears mature, signaling that the extended bearish phase may soon give way to a new bullish impulse segment targeting levels above 1.2000.

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Lower-timeframe technical dynamics support this multi-timeframe alignment. The internal impulse sequence representing wave 5 of wave E is either complete or near finalization. Additionally, an unsuccessful attempt to break above the 1.1126 level—corresponding to the 50.0% Fibonacci retracement level—indicates exhaustion among US dollar buyers, reinforcing the probability of a bullish trend reversal.

US Election Dynamics and Fundamental Drivers

Fundamentally, EUR/USD advanced by 65 pips following preliminary results from the US elections. Reports indicating that Democrats secured control of both chambers of Congress suggest potential legislative gridlock and tighter fiscal management. Market participants expect these political shifts to limit government debt expansion and potentially slow US economic growth, weighing on the greenback.

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In the Eurozone, October inflation data aligned with market expectations, showing headline CPI at 4.0% year-over-year and core CPI at 2.5%. The persistence of elevated price pressures despite previous rate hikes suggests that the European Central Bank (ECB) may need to implement additional rounds of monetary tightening, providing potential underlying support for the euro.

Technical Outlook and Medium-Term Targets

In summary, the completion of the global A-B-C-D-E corrective pattern presents a favorable setup for a new upward trend segment. Provided the corrective low holds, the initial bullish recovery is expected to target the 1.1700–1.1800 resistance zone, with extended upside potential extending toward the 1.2000 handle.

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