EUR/USD Outlook: Wave E Completion Points to Potential Upside

The EUR/USD pair is exhibiting clear technical signs that its multi-wave downward corrective structure is nearing completion. On the higher timeframe, the downward section of the trend has formed an A-B-C-D-E corrective structure where all constituent waves appear approximately equal in magnitude. A full completion of this cycle is expected to pave the way for a major impulsive upward trend targeting levels above 1.2000.

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Lower timeframe analysis reinforces this outlook, indicating that the market is in the final stages of wave E. The internal five-wave sequence of wave E appears fully developed or close to completion, suggesting that the U.S. dollar's broader appreciation phase is running out of momentum. Furthermore, a failed attempt to break below the 1.1126 key support level, corresponding to the 50.0% Fibonacci retracement on the higher timeframe, confirms strong buying interest at lower levels.

Fundamental Drivers and Political Uncertainty

EUR/USD advanced by 60 pips on Monday, supported by shifting market sentiment ahead of the U.S. congressional elections. Polls indicating a 72% probability of a Democratic victory across both chambers of Congress have added pressure to the greenback. High early voter turnout highlights shifting electorate preferences, creating political uncertainty that has softened demand for the dollar.

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Geopolitical de-escalation has further muted safe-haven demand for the U.S. currency. Following reports that diplomatic talks between the U.S. and Iran have resumed to prevent broader conflict, crude oil prices declined sharply while broader market risk appetite improved. Given that the U.S. dollar typically gains during periods of geopolitical friction, recent diplomatic progress has removed a major driver of greenback strength.

Technical Outlook and Upside Targets

Combined technical and fundamental factors keep the bullish reversal scenario as the primary outlook for EUR/USD. The initial upside projection for the potential new trend section points toward the 1.1700–1.1800 resistance zone. A sustained breakout above these levels would validate the larger impulsive structure with long-term targets above 1.2000.

While the technical configuration favors long positions, political event risk surrounding the upcoming U.S. elections may introduce elevated short-term volatility. Traders should look for confirmation of the corrective cycle completion while maintaining strict risk management protocols.

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