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The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. Over the past year, we have seen only three larger-scale wave structures that constantly alternate with each other. Currently, the construction of another three-wave structure continues – a downtrend that began on July 18 of last year. The presumed wave 1 is complete, and wave 2 or b has complicated it three or four times, but at the moment, it is also complete.
The upward trend section may still resume, but its internal structure will be absolutely unreadable in this case. I remind you that I try to highlight clear and unambiguous wave structures that do not tolerate double interpretation. If the current wave analysis is correct, the market has shifted to forming wave 3 or c. Currently, the presumed wave 2 in 3 or c is being built. If this is indeed the case, the construction of this wave may be completed in the near future, as it has already taken on a distinctly three-wave form. In any case, this decline in pair quotes should not end here. Unfortunately, this week the formula worked: news background + the market's reluctance to buy the dollar = a new increase in the EUR/USD pair.
The important level of 1.0956 can save the dollar from even greater problems.
The exchange rate of the EUR/USD pair did not change on Monday as of the opening of the American session. As is often the case, trader activity can increase during the American session. But today, there is no news background in all countries related to the dollar and the euro. Therefore, I do not expect high trading activity.
An important point now is the unsuccessful attempt to break through 1.0956, which corresponds to 50.0%, according to Fibonacci. If it remains unsuccessful, it will be an excellent entry point for sales. Wave 2 in 3 or c may be complete, so I still expect a significant decrease in the pair. However, the bullish sentiment in the market is currently very strong, so I do not exclude a breakthrough of the 1.0956 level and further growth.
Tomorrow, Germany and the US will release inflation reports for February. Inflation in Germany may slow down to 2.5%, and inflation in the US may remain at 3.1%. Even these figures tell us only one thing: the ECB is much closer to the beginning of the softening of monetary policy than the Fed. ECB officials are already openly talking about June as a month when the rate is highly likely to be lowered for the first time. But Jerome Powell hinted to the market last week that if inflation does not continue to slow down, the regulator may delay the rate cut. And the Fed has all the necessary economic data to keep the rate at its peak, even in June. The US economy remains strong, and the labor market is too. Unemployment in February rose to 3.9%, but this value cannot be considered high either.
General conclusions.
Based on the analysis of EUR/USD, I conclude that the construction of a bearish wave set continues. Wave 2 or b has taken on a completed form, so in the near future, I expect the continuation of building an impulse downward wave 3 or c with a significant decrease in the pair. Currently, an internal correctional wave is being built, which could already be completed. I continue to consider only sales with targets near the calculated level of 1.0462, which corresponds to 127.2% according to Fibonacci, and I expect the completion of the corrective wave.
On a larger wave scale, it can be seen that the presumed wave 2 or b, which in length was more than 61.8% according to Fibonacci from the first wave, may be completed. If this is indeed the case, the scenario with the construction of wave 3 or c and a decrease in the pair below 1.04 has begun to be implemented.
The main principles of my analysis:
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