EUR/USD Elliott Wave: Corrective Dive Underway

Executive Summary

• Wave 1 rally from January 2025 to July 2025 appears complete
• Decline to 1.1170 and possibly 1.08 in wave 2.
• The support shelf near 1.1170 may contain the decline.

We now have enough evidence in place to consider a medium-term (or longer) top in place for EURUSD.

The weekly chart above shows a rally from the January 2025 low that reached the upper parallel at the July high. This rally appears to be complete and a sideways to lower consolidation is likely underway.

On January 16, three days after the low formed we forecasted “a rally lasting several months is likely to carry EURUSD above 1.12 and possibly to 1.20.”  EURUSD reached the upper end of the forecast topping at 1.1830.

Now, it’s time to flip the scrip as a correction is likely underway to consider that strong rally.

Current Elliott Wave Analysis

The 6-month rally in EURUSD appears to have ended this month and a correction is likely underway to 1.1170 and possibly lower levels.

The top of EURUSD on July 1 is labeled as wave 1. The decline underway appears incomplete and would be wave 2.

Within the wave 1, wave ((v)) measures equal to wave ((i)) at 1.1832, just a couple of pips within the actual high. Additionally, there is RSI divergence within the wave ((v)) and wave ((iii)) highs. This is a common pattern within a fifth wave of an Elliott wave impulse pattern.

The next trend (lower) will likely carry to below 1.1170.

Near this level is the 38% Fibonacci retracement level of the 6-month rally. Additionally, there is a support shelf of broken resistance and congestion appearing between 1.1033 – 1.1275.

At the lower end of that price zone is a broken trend line dating back to 2023. Therefore, this price zone will offer up a strong level of support that may launch the next rally or at least a small bounce.

Bottom Line

The Elliott wave impulse pattern from January to July 2025 appears over. A downward correction appears to have begun and may visit 1.1170 and possibly lower levels.

As the downward trend takes hold, we’ll review its structure to determine where we are at within the larger wave sequence.

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