Forex Analysis & Reviews: 07.04.2025 - EUR/USD Analysis

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07.04.2025 07:25 PM

EUR/USD Analysis – April 7th

The wave structure on the 4-hour chart for EUR/USD has transformed into a bullish one. I believe no one doubts that this transformation occurred solely due to the new U.S. trade policy. Up until February 28, when the U.S. dollar began to decline sharply, the entire wave pattern looked like a convincing downward trend segment — the formation of corrective wave 2. However, Trump's weekly announcements of various tariffs took their toll. Demand for the U.S. dollar dropped rapidly, and now the entire trend segment that began on January 13 has taken on the form of a five-wave impulse.

Based on this, we should now expect the formation of corrective wave 2 in the new upward trend segment, which may consist of three waves. After that, the dollar's decline should continue — unless Donald Trump completely reverses his adopted trade policy. We've witnessed a case where the news background has changed the wave structure.

The EU Prepares Its Response

The EUR/USD exchange rate remained virtually unchanged on Monday, but that doesn't reflect the market's actual volatility. The pair opened with a gap down, then rose by 160 points, then dropped by 110. As we can see, the movement amplitude remains very high. But what's strange about that, considering what's happening globally?

To briefly reiterate my position on Trump's tariffs: the U.S. President has chosen a strategy — declare war on everyone, and eventually they'll crawl to us on their knees, begging for mercy and a trade deal. Trump believes that tariffs won't harm the U.S., given its power and its President. A temporary downturn is possible, but he sees nothing wrong with that — because afterward will come a Period of Prosperity. Personally, I have serious doubts that this period will begin while Trump remains president. As I've said before, I don't believe that any major country or global alliance will simply accept Trump's protectionist policies and agree to pay whatever he demands. For example, the European Union is already preparing a retaliatory tariff package worth 28 billion dollars. And that certainly won't be the last package — nor the last escalation of the trade war. Well, Trump wanted war — and Trump will get war. It's important to say "Trump wants war," not "the U.S. wants war," because no one in the U.S. government before Trump had such an aggressive stance. Trump "wants to fix the situation" and claims that all countries are eager to make trade deals with America. Yet I don't see any lines forming at the White House.

General Conclusions

Based on my EUR/USD analysis, I conclude that the pair has begun forming a new upward trend segment. The only serious concern here is Donald Trump. If his actions were able to reverse one trend, they can certainly reverse another. Therefore, the upcoming wave structure will completely depend on the U.S. President's stance and decisions. This must be kept in mind at all times. Currently, we should expect the formation of a corrective wave set, which by classical standards may consist of three waves. After that, a new upward wave should form, and buying opportunities should be sought with targets well above the 1.10 area.

In the larger wave timeframe, the wave pattern has shifted to bullish. A long-term upward wave structure is likely ahead — but news flow from Trump alone could turn everything upside down once more.

Core Principles of My Analysis:

Wave structures should be simple and clear. Complex formations are harder to trade and often subject to revision.
If you're not confident in what's happening in the market, it's better to stay out.
Absolute certainty in market direction doesn't exist and never will. Always use protective Stop Loss orders.
Wave analysis can be combined with other types of analysis and trading strategies.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.