EUR/USD Elliott Wave: Fed cuts rates, Euro rallies

Executive summary

• Sept 17 high is considered the top of wave B of a triangle or end of wave 1 of a larger impulse.
• Brief rally anticipated to near 1.18, followed by decline to 1.16.
• 1.1468 is the key level between the two main wave counts

On Wednesday, the FOMC concluded their 2-day meeting with their latest interest rate announcement. The Fed cut the target interest rate 25 basis points. There are two more anticipated 25 basis point cuts for 2026.

Current Elliott Wave analysis

There are a couple of Elliott wave patterns I’m tracking on EUR/USD.

The first is that a large symmetrical triangle is getting late into development. The current rally would be wave ((d)) of the triangle. One more soft decline in wave ((e)) to finish the triangle pattern.

This is a bullish triangle pattern and scheduled to be wave ‘B’ of a larger bullish zigzag pattern. The rally once the triangle finishes (likely near 1.16, but while holding above 1.1468) may carry 1000-2000 pips higher reaching 1.25-1.35.

However, there is another pattern (orange labels) that suggests the bullish impulse from January 2025 actually ended in September. Therefore, the decline to October was simply the first wave lower. This current rally from October would prove temporary and lead to a secondary wave lower to push below 1.1468 support, possibly reaching 1.12.

Under both of these scenarios, the current rally is likely limited and a decline to 1.16 is in common. What happens after that is where these patterns diverge.

Bottom line

The obvious Elliott wave count we are following is that a triangle wave pattern is still underway and may conclude with one more dip to near 1.16.

The alternate count calls for a brief rally, then a stronger decline that falls below 1.1468.