The wave counting on the 4-hour chart of the EUR/USD currency pair remains the same. The pair still passes no more than 50 points per day, which does not allow making any changes to the wave pattern. Last week, we saw a slight decline in quotes, which was caused by an unsuccessful attempt to break through the 38.2% Fibonacci level. However, at the moment, the decline in quotes has already ended, as has the entire corrective wave b (presumably). If this is indeed the case, then the pair has moved to building wave a with targets located near the 1.2036 mark, which corresponds to 61.8% Fibonacci level. The entire upward section of the trend may turn out to be longer or five-wave. However, at this time, I expect to see a new corrective section of the trend, and not an impulse one. The news background does not support the European currency so that the construction of an upward trend section continues. However, it is not canceled.
The news background for the EUR/USD pair was very weak on Wednesday. This resulted in weak market activity, which barely supported the vigorous construction of an upward wave c. EU's industrial production in July reported an increase of 1.5% MoM and 7.7% YoY. Markets could have increased their demand for the euro but did not do so. Meanwhile, the US reported an increase in industrial production of 0.4% MoM, which was fully in line with expectations. However, neither the first nor the second report was followed by an adequate market reaction. Unless, of course, we consider a 10-point movement as a reaction.
Based on this, I conclude that the markets continue to wait for something. Given that the Fed will hold a meeting next week, it is not difficult to guess what the markets are waiting for. However, the problem also lies in the fact that the markets have been trading the Euro/Dollar pair very inactive for quite a long time. Thus, even the Fed meeting may not change the situation dramatically. If so, the pair will continue to "drag", according to the current wave counting. And the construction of the proposed wave c will take a month, if not more.
Tomorrow, Christine Lagarde will give a speech in the European Union, and in the US, the report on August retail trade will be released. These are the most important events of the day, but even these may be overlooked by the markets for a strong movement.
Based on the analysis, I conclude that the construction of the downward wave b could have ended around the 1.1771 mark. Therefore, I still expect an increase in quotes. So, I still advise buying the EUR/USD pair with targets located near the 1.1965 and 1.2036 marks, which corresponds to 50.0% and 61.8% Fibonacci levels, for each MACD signal "up." A successful attempt to break through the level of 1.1805, which corresponds to 23.6% Fibonacci level, indicates the readiness of the markets to build a wave c.
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 took a more complex form, but it still ended in the same place as the previous three-wave section.
