Forex Analysis & Reviews: 29.05.2025 - EUR/USD Analysis on May 29,...

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29.05.2025 08:18 PM

EUR/USD Analysis on May 29, 2025

The wave pattern on the 4-hour chart for EUR/USD has transformed into an upward structure and remains so. It is clear that this shift has occurred solely due to the new U.S. trade policy. Before February 28, when the U.S. dollar began its sharp decline, the wave pattern was a convincing downward trend, building a corrective Wave 2. However, Donald Trump's weekly announcements about various tariffs have taken their toll. Demand for the U.S. dollar plummeted, and now the entire trend segment, starting from January 13, has taken on the shape of a bullish impulse.

At this point, Wave 2 within 3 is presumably complete. If this assumption is correct, price increases may continue in the coming weeks and months. However, the U.S. currency will remain under pressure unless Donald Trump completely reverses his adopted trade policy. The chances of that happening are extremely low, but the dollar also won't keep falling forever. At present, there is no solid reason to expect strong growth for the greenback.

On Thursday, the EUR/USD rate rose by 100 basis points on the back of explosive news. Overnight, the U.S. Court of International Trade struck down most of the tariffs imposed by Trump on countries around the world, declaring them unlawful. The court's decision was simple, clear, and unequivocal: despite the state of emergency declared by Trump under questionable pretenses, the U.S. president does not have the authority to make such sweeping decisions without Congressional approval.

The key issue with the tariffs was that Trump imposed (and repeatedly modified) them unilaterally, citing emergency powers. However, the court reviewed the emergency powers law and concluded that it does not grant the president the right to introduce trade tariffs independently.

As a result, for now, all tariffs—except those on steel and aluminum—can be considered canceled. However, it is unclear how long they will remain inactive. The court's decision must first be delivered in written, official form to all U.S. customs checkpoints. Border officials cannot act on the court's decision without clear directives from the federal government. Therefore, while the ruling exists, whether and when it will be enforced remains unknown. Furthermore, Trump has already appealed the court's decision, so legal proceedings will continue. The matter is far from over, and as a result, demand for the U.S. dollar has dropped once again.

Conclusions

Based on the EUR/USD analysis, the instrument continues to develop a bullish segment of the trend. In the near term, the wave structure will be entirely driven by news flow, particularly developments related to Trump's decisions and U.S. foreign policy. Wave 3 of the upward trend is now underway, and its targets may extend all the way to the 1.25 area. Therefore, I consider buying opportunities with targets above 1.1572, corresponding to the 423.6% Fibonacci level.

On the larger wave scale, the structure has also turned bullish. A long-term upward wave sequence is likely ahead. However, new statements from Trump could once again turn everything upside down.

Key Principles of My Analysis:

Wave structures should be simple and clear. Complex formations are harder to trade and often lead to structural changes.
If you're not confident in the market situation, it's better not to enter.
There is never 100% certainty in any direction. Always use protective Stop Loss orders.
Wave analysis can and should be combined with other analysis methods 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.