EUR/USD Technical Outlook: Wave Structure Signals Bullish Reversal

The EUR/USD currency pair is showing signs of completing its long-term downward corrective cycle. According to higher-timeframe Elliott wave analysis, the corrective A-B-C-D-E structure appears complete, indicating that an impulsive upward segment could soon begin. A successful completion of this wave cycle opens the path toward targets well above the 1.2000 level.

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On the lower timeframe, the internal structure of wave E has developed as a five-wave impulse, with wave 5 approaching completion. Price behavior around the key 1.1126 level, which coincides with the 50.0% Fibonacci retracement mark, suggests that downward momentum is exhausting. This technical configuration favors a recovery toward the primary target region between 1.1700 and 1.1800.

US Midterm Elections and Fundamental Impact

From a fundamental perspective, the exchange rate has remained stable as market participants await the outcome of the US congressional midterm elections. Voting trends and historical midterm patterns suggest a potential shift in congressional control toward the Democratic Party.

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A split government would introduce political gridlock, likely restricting legislative momentum and complicating future fiscal negotiations. Increased political friction, including potential risks surrounding upcoming budget approvals, poses a medium-term headwind for the US Dollar.

Market Synthesis

The combination of a completed five-wave corrective structure and potential US political division provides a favorable backdrop for the euro. As wave E nears its conclusion, technical and fundamental factors align to support a sustained EUR/USD upward trend.

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