The Elliott wave count on the 4-hour chart for EUR/USD has become more complex. On the higher timeframe (lower chart), the downward trend segment has taken the form of a five-wave structure, A-B-C-D-E, which could be completed at any time, as it already appears to be well developed. All the waves within this segment are approximately equal in size, so I consider it corrective. If this assumption is correct, then once this structure is complete, an impulsive upward trend segment will begin, with targets well above the 1.2000 level.

On the lower timeframe (upper chart), an impulsive wave sequence is still developing, potentially forming part of wave E on the higher timeframe. If this is indeed the case, then no matter how strongly the dollar rises, its strengthening is nearing an end. The presumed wave 5 of E is either complete or close to completion. In either case, the current wave structure suggests that the downward wave sequence is nearing completion on both charts. The news background and the sharp shift in market sentiment triggered a strong rally in the US currency, but there are few remaining reasons for further dollar appreciation.

Donald Trump Has Lost

The EUR/USD exchange rate rose by 65 basis points on Wednesday. The key event for today was undoubtedly the US election, or more precisely, the preliminary results. By early morning, it had become clear that the Democrats would win control of both chambers of Congress, as the voting results were decisive. The Republicans lost control of both chambers of Congress, potentially limiting Donald Trump's ability to pursue his agenda without congressional support and increasing the possibility of another impeachment proceeding, which would be his third. Regardless, his presidency is likely to be a notable chapter in US political history.

However, we should not focus all our attention solely on the US election. The new Congress will not convene until January 3, so no changes in economic or political policy should be expected before 2027. And before 2027, Trump may still have time to resume the war with Iran or start a couple of other conflicts. Therefore, it is clearly too early to celebrate Trump's election defeat.

Nevertheless, the currency market showed today that it expects the economic situation in the United States to deteriorate. Democrats generally tend to manage public finances more prudently and are less willing to allow government debt to rise without limits simply to keep the economy growing. Consequently, economic growth could slow significantly under a Democratic-controlled Congress.

The European Union also released its October inflation report today, which, as expected, showed a rate of 4%. Core inflation also matched forecasts, coming in at 2.5%. However, I cannot overlook the fact that inflation in the EU continues to rise even after two rounds of monetary policy tightening. Therefore, the ECB will most likely need a third and even a fourth round of tightening. The market largely ignored the first two rounds, but perhaps it will pay attention to further policy tightening. The euro remains near its lows but, according to the current wave count, is looking exclusively upward. Therefore, I continue to consider the development of a new upward trend segment to be the most likely scenario.

General Conclusions

Based on my EUR/USD analysis, I conclude that the pair remains within the global corrective trend segment A-B-C-D-E. However, this structure appears fully developed and may therefore be complete. In my view, this is a good time not only to consider buying the European currency but also to anticipate the development of a full-fledged upward trend segment. According to the higher timeframe, the pair should be expected to rise at least to the 1.1700–1.1800 level. The unsuccessful attempt to break above the 1.1126 level, which corresponds to the 50.0% Fibonacci retracement level (lower chart, higher timeframe), also indicates that the market may be ready to move higher.

The higher timeframe shows a downward trend segment that has taken the form of an A-B-C-D-E structure. The internal wave structure of wave E has developed into a five-wave impulse pattern, but it may already be complete. If this assumption is correct, a new upward trend segment will begin to develop.

Key Principles of My Analysis

1. Wave structures should be simple and easy to understand. Complex structures are difficult to trade and often indicate potential changes in the market.

2. If you are uncertain about what is happening in the market, it is better to stay out.

3. There can never be 100% certainty about the direction of market movement. Do not forget to use protective Stop Loss orders.

4. Elliott wave analysis can be combined with other types of analysis and trading strategies.