EUR/USD Technical Analysis: Downward Pressure Persists

The EUR/USD 4-hour chart reveals an increasingly complex Elliott Wave structure. On the higher timeframe, the primary downward trend segment has formed an A-B-C-D-E five-wave structure. Given that all internal waves are approximately equal in size, this corrective sequence appears fully developed and may conclude at any moment.

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On the lower timeframe, an impulsive wave sequence continues to unfold, likely representing wave E of the higher timeframe. The presumed wave 5 of E is either complete or nearing completion, signaling that the dollar's recent strengthening phase is approaching its limits. Despite sharp moves driven by shifting market sentiment, fundamental catalysts for sustained US dollar upside are dwindling.

Factors Impacting the Euro

During Thursday's session, the EUR/USD pair fluctuated within a narrow 40 to 50 point range despite an empty economic calendar. In the absence of tier-one data releases, these moves represent standard market noise rather than directional conviction. Nevertheless, the fundamental backdrop for the single currency remains subdued.

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Despite accelerating eurozone inflation—which raises the probability of more aggressive European Central Bank rate hikes—the euro struggles to attract sustained buying interest. Persistent market concerns regarding Middle Eastern geopolitical risks and domestic unrest in France and other EU nations continue to weigh on sentiment. As a result, the market maintains a predominantly negative outlook on the European currency.

Outlook and Technical Levels

The current Elliott Wave structure implies that a bullish trend segment could soon develop on both major timeframes. However, the market has thus far failed to establish a convincing upward correction, demonstrating a clear reluctance to price in an end to dollar dominance. Price action remains the ultimate driver, overriding theoretical wave counts and news flows.

From a technical perspective, the pair remains constrained within a global A-B-C-D-E corrective trend segment that appears fully matured. A failed attempt to breach the 1.1126 support level, which aligns with the 50.0% Fibonacci retracement on the higher timeframe, hints at growing preparation for a bullish reversal. Sustained upward momentum could eventually target the 1.1700 to 1.1800 resistance region.

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