The wave counting of the 4-hour chart for the Euro/Dollar instrument remains unchanged for the time being. However, today's decline in quotes by 60 basis points suggests that the wave e of the downward trend section may become more complicated and take a longer form. Although, the internal wave structure of this wave takes a five-wave form. If this is indeed the case, then the construction of the proposed wave 5 in e has now begun. Thus, in the near future, the construction of this wave can be completed, and the pair can still proceed to the construction of a new upward trend section. An unsuccessful attempt to break through the 100.0% Fibonacci level (the second in a row) may lead to a new departure of quotes from the reached lows. Thus, I expect the pair to move to the construction of a new upward trend section and I consider this option the most likely at this time. At the same time, a strong news background for the US currency may lead to a more significant complication of the downward trend section.
The news background for the Euro/Dollar instrument was quite interesting on Tuesday, but the markets, unfortunately, did not pay due attention to it. Given that with the opening of markets in the US, the US currency began to grow strongly, we can assume that the US reports were strong. However, in reality, this is not the case. Let's start with the fact that in the morning, the report on European Union GDP for the second quarter was released. It is not surprising that the markets did not react to it in any way, since its value did not differ at all from the previous one. But it was quite difficult to find reasons for buying the dollar in the afternoon. The report on retail trade volumes in the US was much weaker than market expectations, -1.1% MoM, and the less important report on industrial production was slightly better than expectations, +0.9% MoM.
However, even if these reports are considered together, it turns out that one is positive and the second is negative. That is, with any consideration of this issue, it turns out that the US currency should not have risen on Tuesday. Thus, I am inclined to the option that the markets are positively expecting the evening speech of Fed President Jerome Powell. Let me remind you that recently they have been waiting for words from Powell about his readiness to curtail the economic stimulus program, but they can't wait yet. Last week, several representatives of the Federal Reserve expressed their readiness to vote for the completion of the asset purchase program in September. But the main voice is the voice of Jerome Powell, who has so far remained silent on this issue. A higher dollar may mean that the markets believe in the Fed's readiness to curtail stimulus.
Based on the analysis, I conclude that the construction of the descending section could have ended around the level of 1.1704, which is equal to 100.0% according to Fibonacci. Wave e may get a more pronounced five-wave internal structure, so the instrument may decline by another 50-60 points, however, according to the current wave counting, the completion of the construction of the downward section is still approaching. An unsuccessful attempt to break through the 100.0% Fibonacci level will indirectly once again indicate the readiness of the markets to buy the euro currency.
The wave counting of the higher scale looks quite convincing. We see three three-wave sections of the trend, which are approximately the same in size. However, the last section of the trend quite unexpectedly began to take a more complex form, but it can still end in the near future.
