02.05.202417:41 Forex Analysis & Reviews: Analysis of EUR/USD pair on May 2nd. The market calmly responded to the FOMC meeting

The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. At the moment, we observe the construction of the presumed wave 3 in 3 or c of the downtrend section. If this is indeed the case, the decline in quotes will continue for quite some time, as the first wave of this section completed its construction around the 1.0450 mark. Therefore, the third wave of this trend section should end below.

Moreover, the 1.0450 mark is the target only for the third wave. If the current downtrend section becomes impulsive, then we can expect a total of five waves, and the euro may well decline below the 1.0000 mark. Undoubtedly, it is challenging to expect such a development of events at the moment. However, there have been enough surprises in the currency market in recent years. Anything is possible.

Is there a possibility of changing the wave analysis? It always exists. However, if since October 3 of last year, we have been observing a new uptrend section, then the last downward wave does not fit into any structure, which cannot be. Therefore, an upward section is possible only with a significant complication of the wave analysis.

Demand for the dollar started to rise but slowly.

The EUR/USD pair rate slightly decreased on Thursday after rising by several tens of points on Wednesday. I remind you that yesterday evening, there was a speech by Fed Chairman Jerome Powell about which we still need to talk. I deliberately mention Powell's speech and do not talk about the results of the FOMC meeting because the American regulator did not make any important decisions. But Jerome Powell said that the Fed does not intend to lower interest rates in the near future since inflation in the United States has stalled, and it may take quite a long time before the Consumer Price Index reaches the target level or at least begins to approach it.

In essence, such a statement only confirms the assumptions that I have repeatedly voiced before. Namely, the Fed will only start easing monetary policy, no matter how much the market wants it and no matter how much the market expects it, once inflation drops to at least 2.5%. Since nothing like this is expected in the near future, even without Jerome Powell, it could be understood that a transition to a more "dovish" policy is not imminent. Therefore, nothing prevents the US currency from rising in the coming weeks and months. I still expect a decline in the pair and consider selling.

General conclusions.

Based on the analysis of the EUR/USD, I conclude that the construction of a downward set of waves continues. Waves 2 or b and 2 in 3 or c are completed, so I expect the continuation of the construction of an impulse downward wave 3 in 3 or c with a significant decrease in the pair. I continue to consider sales with targets around the calculated mark of 1.0462, as the news background remains on the side of the dollar. A successful attempt to break through the 1.0637 mark, which is equivalent to 100.0% according to Fibonacci, will indicate the market's readiness for new sales.

On a larger wave scale, it can be seen that the presumed wave 2 or b, which in length exceeded 61.8% according to Fibonacci from the first wave, may, therefore, be completed. If this is indeed the case, the scenario with the construction of wave 3 or c and a decline in the pair below the 4th figure has begun to be implemented.

The main principles of my analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to play, often leading to changes.
2. If there is confidence in what is happening in the market, it is better to avoid entering it.
3. There is never one hundred percent certainty about the direction of movement. Remember about Stop Loss protective orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.