Rewritten from the original article by EWM Interactive: “Elliott Wave Analysis of EURUSD – August 25th, 2023”
Original Author: EWM Interactive
Source: https://ewminteractive.com/elliott-wave-analysis-eurusd-august-25th-2025
EUR/USD Elliott Wave Analysis – Comprehensive Outlook as of August 25th, 2023
The EUR/USD currency pair has once again found itself under the microscope of technical analysts and currency traders as we approach the latter part of 2023. A mixture of macroeconomic uncertainty, persistent inflation pressures, and diverging central bank policies has shaped the trading tone of this major forex pair. In this in-depth examination, we assess the currency through the lens of the Elliott Wave Principle and consider possible future developments as 2023 winds down.
This analysis is rooted in Elliott Wave theory, a technical analysis method that focuses on identifying price cycles in financial markets. Elliott believed markets moved in repetitive cycles of sentiment fueled by investor psychology, forming identifiable wave patterns. For any pair but especially heavily traded ones like EUR/USD, using Elliott Wave principles can help decipher broader trends and short-term market pivots.
1. Historical Elliott Wave Context
To understand where the EUR/USD stands now, it’s essential to look at the broader historical context. According to EWM Interactive, the euro formed a five-wave impulse pattern from its March 2020 pandemic low to the high of 1.2349 reached in January 2021. This five-wave impulse formed the first significant trend leg in the larger cycle.
– Wave 1 began the rally from March 2020
– Wave 2 corrected lower but did not retrace the entirety of Wave 1
– Wave 3, often the strongest, propelled the euro to highs around 1.2349
– Wave 4 was a sideway correction that cooled the momentum
– Wave 5 completed the impulse at the end of the cycle in early 2021
Following this five-wave structure, as per Elliott’s rules, a three-wave corrective pattern was anticipated. This new correction began unfolding shortly after the January 2021 peak.
2. The A-B-C Correction in Progress
With the completion of the five-wave impulse, the EUR/USD entered a clear corrective phase, best viewed as an A-B-C zigzag pattern:
– Wave A took the pair from 1.2349 downward to the 1.0350 level, representing a sharp initial decline
– Wave B rebounded to the mid-1.10s range, retracing around 50 percent of Wave A
– Wave C then resumed to the downside, completing the correction in a precise three-wave zigzag structure
This drop in Wave C took place over several months and reflects investor skepticism surrounding the eurozone’s economic stability, coupled with aggressive U.S. Federal Reserve tightening.
3. The Position of EUR/USD in Late August 2023
At August 25th, 2023, the Elliott Wave structure suggests that the larger A-B-C corrective pattern is entirely complete. The corrective wave concluded at the September 2022 low of 0.9536. From that price floor, the EUR/USD has begun a new impulsive rally.
This upward move is again being interpreted as a developing five-wave impulse to the upside, representing the beginning of a new bullish cycle:
– Wave (1) lifted prices above 1.10 before completing in May 2023
– Wave (2) corrected lower to near the 1.06 region by July
– Wave (3) appears to be underway now, with lots of room to stretch toward higher targets in late 2023 and into 2024
4. Forecasting the Ongoing Bullish Impulse
Wave (3), per Elliott guidelines, is typically the strongest and longest of the five waves. According to EWM Interactive, current price behavior supports the notion that Wave
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