The wave analysis of the 4-hour chart for the euro/dollar pair remains quite clear. Over the past year, we have observed only three-wave structures that consistently alternate with each other. In recent months, I have regularly mentioned that I am expecting the pair to approach the 5th wave, from which the construction of the last upward three-wave sequence began. This target was achieved after a two-month decline. After reaching this target, the construction of a corrective wave 2 or b began, which has already taken on a clear five-wave and completed form. This means that the euro currency may resume its decline this week.
No matter how wave 2 or b ultimately unfolds (it may be more complex), the overall decline of the European currency will not be complete because, in any case, the construction of a third wave of the downward trend segment is required. Inside the first wave, there are five internal waves, so it is complete. Inside the second wave, there are also five waves, so it may already be complete. I expect the construction of wave 3 or c.
Interesting information for euro traders.
The exchange rate of the euro/dollar pair fell by another 30 basis points on Wednesday. The pair's exchange rate has been declining for the third consecutive day, even though the news background is very weak or even absent. From time to time, members of the ECB and the Fed Boards make statements, and we will definitely consider some of them. However, to cut to the chase, the reason for the decreased demand for the euro currency is not due to them. It is all about the current wave analysis, which clearly implies the construction of a descending wave 3 or c. Undoubtedly, the wave pattern can take on a more complex form at any moment, but it is pointless to analyze waves if the forecasts never come true. Nonetheless, I believe that unexpected events do happen from time to time, but this is not such a case right now.
Martin Kazak, one of the ECB managers, stated today that the 2% target has not changed, will not change, and will be achieved. According to the updated ECB forecasts, this level will be reached in mid-2025. The day before, the ECB's Chief Economist, Philip Lane, stated that the regulator is seeing some progress in reducing core inflation, but it is still too little to celebrate a victory. A consumer survey in the European Union showed that they expect 4% inflation in the next 12 months. As we can see, consumers do not share the ECB's optimism, which is not really optimism when it comes to reducing to 2% by 2025.
General conclusions
Based on the analysis conducted, I conclude that the construction of a descending wave pattern continues. The targets around the level of 1.0463 have been perfectly achieved, and an unsuccessful attempt to break this level indicated a transition to the construction of a corrective wave. Wave 2 or b has taken on a completed form, so I expect the construction of an impulsive downward wave 3 or c in the near future with a significant decline in the pair. I still recommend selling, but initially be cautious since wave 2 or b could theoretically take on an even more extended form.
On a higher wave scale, the ascending trend segment's wave pattern has taken on an extended form but is likely complete. We have seen five upward waves, which are most likely the structure a-b-c-d-e. The pair then formed four three-wave sequences: two downward and two upward. Now it has entered the stage of constructing another extended downward three-wave structure.
