The wave marking of the 4-hour chart for the euro/dollar instrument still does not require adjustments, but it is undoubtedly becoming more complicated. Given the rather strong increase in the quotes of the euro currency, it can be assumed that wave five has completed its construction since it is unlikely that the rising wave of the last week is part of wave 5. Thus, the working option is the end of a long downward trend and the beginning of a new, ascending, at least corrective, at least three waves. Since the European currency still does not show strong growth, I cannot say unequivocally that there will be no more decline in demand for this currency in the near future. The option of constructing a correction section and further resuming the downward one is not excluded at all. The option of complicating the entire downward section of the trend is not excluded, which will take an even more extended form in this case. The news background for the markets remains one of the key factors, so if it gets worse, the demand for the euro may start to fall again. And it may be getting worse, which was perfectly shown to us last Tuesday and Wednesday. The wave marking indicates that the market is ready to build at least three waves.
Geopolitics is getting worse, and the euro is falling even before the FOMC meeting.
The euro/dollar instrument fell by 55 basis points on Tuesday, and today – by another 70. The horizontal movement can be considered completed, but instead of seeing the construction of a new upward wave within the framework of a corrective or a new impulse upward trend segment, we see another decline in demand for the EU currency. Thus, already today, the low of this wave can go beyond the low of wave 5. If the approach is not too strong and a strong departure of quotes from the reached lows follows, then it can be assumed that the construction of the correction structure a-b-c or a-b-c-d-e has begun. If the decline is strong, then, most likely, the entire downward section of the trend will once again take a longer form, and the wave marking will require new additions.
What to expect from the Fed today? From my point of view, the FOMC will not follow the most stringent scenario and raise the interest rate by 100 basis points. However, the markets may already account for an increase of 75 points, and their reaction may be the opposite of the one that many are counting on now. I believe it is quite possible to expect an increase in demand for the European currency, and in this case, the wave marking will not become more complicated. Still, the construction of wave three, or a corrective upward trend section, will begin. From the point of view of waves, everything will be logical and beautiful. But if the interest rate still rises by 100 points, the demand for the US currency may grow even stronger, and the fall of the instrument will continue.
General conclusions.
Based on the analysis, I conclude that the construction of the downward trend section is not completed with a probability of 100%. Sales should be abandoned for a while since we have five waves down now, and the tool can now build a corrective set of waves. I would not advise you to rush with purchases either since the news background may cause a new drop in demand for the European currency. The results of the FOMC meeting will be announced today.
At the higher wave scale, the wave marking of the descending trend segment becomes noticeably more complicated and lengthens. It can take on almost any length, so I think it's best to isolate the three and five-wave standard structures from the overall picture and work on them. One of these five waves may be just completed now.
