diff --git a/core/src/main/java/io/undertow/attribute/ExchangeAttributeParser.java b/core/src/main/java/io/undertow/attribute/ExchangeAttributeParser.java
index e493bf32e0..7bd6c9e94c 100644
--- a/core/src/main/java/io/undertow/attribute/ExchangeAttributeParser.java
+++ b/core/src/main/java/io/undertow/attribute/ExchangeAttributeParser.java
@@ -75,6 +75,7 @@ public ExchangeAttribute parse(final String valueString) {
         final List<ExchangeAttribute> attributes = new ArrayList<>();
         int pos = 0;
         int state = 0; //0 = literal, 1 = %, 2 = %{, 3 = $, 4 = ${
+        int braceDepth = 0; // Track the depth of curly braces
         for (int i = 0; i < valueString.length(); ++i) {
             char c = valueString.charAt(i);
             switch (state) {
@@ -95,6 +96,7 @@ public ExchangeAttribute parse(final String valueString) {
                 case 1: {
                     if (c == '{') {
                         state = 2;
+                        braceDepth++;
                     } else if (c == '%') {
                         //literal percent
                         attributes.add(wrap(new ConstantExchangeAttribute("%")));
@@ -108,16 +110,22 @@ public ExchangeAttribute parse(final String valueString) {
                     break;
                 }
                 case 2: {
-                    if (c == '}') {
-                        attributes.add(wrap(parseSingleToken(valueString.substring(pos, i + 1))));
-                        pos = i + 1;
-                        state = 0;
+                    if (c == '{') {
+                        braceDepth++;
+                    } else if (c == '}') {
+                        braceDepth--;
+                        if (braceDepth == 0) {
+                            attributes.add(wrap(parseSingleToken(valueString.substring(pos, i + 1))));
+                            pos = i + 1;
+                            state = 0;
+                        }
                     }
                     break;
                 }
                 case 3: {
                     if (c == '{') {
                         state = 4;
+                        braceDepth++;
                     } else if (c == '$') {
                         //literal dollars
                         attributes.add(wrap(new ConstantExchangeAttribute("$")));
@@ -132,30 +140,26 @@ public ExchangeAttribute parse(final String valueString) {
                 }
                 case 4: {
                     if (c == '}') {
-                        attributes.add(wrap(parseSingleToken(valueString.substring(pos, i + 1))));
-                        pos = i + 1;
-                        state = 0;
+                        braceDepth--;
+                        if (braceDepth == 0) {
+                            attributes.add(wrap(parseSingleToken(valueString.substring(pos, i + 1))));
+                            pos = i + 1;
+                            state = 0;
+                        }
+                    } else if (c == '{') {
+                        braceDepth++;
                     }
                     break;
                 }
-
             }
         }
-        switch (state) {
-            case 0:
-            case 1:
-            case 3:{
-                if(pos != valueString.length()) {
-                    attributes.add(wrap(parseSingleToken(valueString.substring(pos))));
-                }
-                break;
-            }
-            case 2:
-            case 4: {
-                throw UndertowMessages.MESSAGES.mismatchedBraces(valueString);
-            }
+        if (state != 0 || braceDepth != 0) {
+            throw UndertowMessages.MESSAGES.mismatchedBraces(valueString);
+        }
+        if (pos != valueString.length()) {
+            attributes.add(wrap(parseSingleToken(valueString.substring(pos))));
         }
-        if(attributes.size() == 1) {
+        if (attributes.size() == 1) {
             return attributes.get(0);
         }
         return new CompositeExchangeAttribute(attributes.toArray(new ExchangeAttribute[attributes.size()]));
diff --git a/core/src/test/java/io/undertow/attribute/ExchangeAttributeParserTest.java b/core/src/test/java/io/undertow/attribute/ExchangeAttributeParserTest.java
new file mode 100644
index 0000000000..17766511be
--- /dev/null
+++ b/core/src/test/java/io/undertow/attribute/ExchangeAttributeParserTest.java
@@ -0,0 +1,57 @@
+/*
+ * JBoss, Home of Professional Open Source.
+ * Copyright 2014 Red Hat, Inc., and individual contributors
+ * as indicated by the @author tags.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ *  Unless required by applicable law or agreed to in writing, software
+ *  distributed under the License is distributed on an "AS IS" BASIS,
+ *  WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ *  See the License for the specific language governing permissions and
+ *  limitations under the License.
+ */
+
+package io.undertow.attribute;
+
+import org.junit.Assert;
+import org.junit.Test;
+
+import java.util.Collections;
+
+public class ExchangeAttributeParserTest {
+
+    @Test
+    public void testSimpleNestedAttribute() {
+        ExchangeAttributeParser parser = new ExchangeAttributeParser(ExchangeAttributeParserTest.class.getClassLoader(), Collections.emptyList());
+        String attributeString = "%{myCustomAttr:%{REQUEST_LINE}}";
+        ExchangeAttribute attribute = parser.parse(attributeString);
+        // The attribute should be parsed as a single nested attribute, not as a composite of multiple attributes
+        Assert.assertEquals("Parsed attribute string should match input", attributeString, attribute.toString());
+        Assert.assertFalse("Attribute should not be of CompositeExchangeAttribute type", attribute instanceof CompositeExchangeAttribute);
+    }
+
+    @Test
+    public void testComplexNestedAttribute() {
+        ExchangeAttributeParser parser = new ExchangeAttributeParser(ExchangeAttributeParserTest.class.getClassLoader(), Collections.emptyList());
+        String attributeString = "%{myCustomAttr:%{anotherCustomAttr:%{REQUEST_LINE}}-%{REQUEST_METHOD}}";
+        ExchangeAttribute attribute = parser.parse(attributeString);
+        // The attribute should be parsed as a single nested attribute, not as a composite of multiple attributes
+        Assert.assertFalse("Attribute should not be of CompositeExchangeAttribute type", attribute instanceof CompositeExchangeAttribute);
+        Assert.assertEquals("Parsed attribute string should match input", attributeString, attribute.toString());
+    }
+
+    @Test
+    public void testSimpleAttribute() {
+        ExchangeAttributeParser parser = new ExchangeAttributeParser(ExchangeAttributeParserTest.class.getClassLoader(), Collections.emptyList());
+        String attributeString = "%{REQUEST_LINE}";
+        ExchangeAttribute attribute = parser.parse(attributeString);
+        Assert.assertTrue("Attribute should be of RequestLineAttribute type", attribute instanceof RequestLineAttribute);
+        Assert.assertEquals("Parsed attribute string should match input", attributeString, attribute.toString());
+    }
+
+}
\ No newline at end of file