The 4-hour chart for the euro/dollar pair still shows the same wave pattern, which is excellent because it allows us to predict how the situation will develop. Although its amplitude would be more appropriate for the impulsive section, the upward part of the trend has been corrected. The wave pattern a-b-c-d-e that we were able to obtain features a wave e that is far more complex than the other waves. If the wave markings are accurate, then this pattern's development is complete, and wave e was far longer than any other wave. I still anticipate a new, substantial decline of the pair because we are predicted to build at least three waves down. A few days or weeks of inactivity are possible with the pair, though. The quotes' retreat from the low they attained on Monday points to the beginning of wave 2 or b. If this is the case, then any background news will result in a rise in quotes for a while. In any event, I anticipate a new, rather sharp decrease following the completion of this wave, as the pair must first create at least three waves downward before considering a potential new upward part.
On Friday, the euro/dollar pair increased by 40 basis points with low amplitude. Throughout the day, there was exactly one report from each side (euro and dollar) that may pique the markets' interest. In the United States, the ISM index of business activity in the service sector was released, which amounted to 55.1 points, but significantly outperformed market expectations. The index of business activity in the service sector in the European Union was released, rising to 52.7 points, but just missing expectations. While both indices are generally favorable, demand for both the dollar and the euro may increase during the day. Yet, only the euro currency increased, and it is not so powerful that it should be given special attention. It's possible that the suggested wave b is already finished or that it will adopt a somewhat more complicated structure. So far, it does not appear to be very persuasive, and Friday's 40-point hike does not affect the wave markup.
Morgan Stanley, a major player in the financial industry, also announced on Friday that it has examined the most recent data on inflation in the European Union and now anticipates a hike in interest rates to 4% by the end of the year. As a result, there may be a 50 basis point hike in March, as practically all members of the ECB Governing Council have previously stated, and then there will be two additional increases of 25 basis points. I think that this won't be sufficient to bring inflation back to the desired level, which could cause the euro's decline to be considerably more pronounced than it is right now. In the meantime, the Fed keeps raising interest rates precisely as needed—not quickly, nor slowly. Furthermore, peak values are not constrained by the Fed. For many years, its rate might be significantly higher than the ECB rate.
Conclusions in general.
I draw the conclusion that the upward trend section's development is finished based on the analysis. As a result, sales with targets close to the predicted mark of 1,0284, which corresponds to 50.0% Fibonacci, can now be taken into consideration. A correction wave 2 or b can be developed at this point, which should be considered. Opening sales now on the MACD "down" indications would be a good idea.
On the older wave scale, the ascending trend section's wave pattern has grown longer but is likely finished. The a-b-c-d-e pattern is most likely represented by the five upward waves we observed. The downward part of the trend is already beginning to form and can have any form or extent.
