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The wave analysis of the 4-hour chart for the euro/dollar pair remains unchanged. Over the past year, we have observed only three wave structures that constantly alternate with each other. At present, the construction of another three-wave downward structure is ongoing. The assumed wave 1 is completed, and wave 2 or b has complicated three or four times, but at the moment, it can still be considered conditionally completed, as the pair has been declining for more than a month.
The upward trend segment may be resumed, but its internal structure will be unreadable. I highlight unambiguous wave structures that do not tolerate dual interpretation. If the current wave analysis is correct, the market has moved on to forming wave 3 or c. The successful attempt to break the level of 1.0788, corresponding to 76.4% according to Fibonacci, once again confirmed the market's readiness for sales. Now, the nearest target is the level of 1.0637, which is equivalent to 100.0%, according to Fibonacci. However, I do not expect the decline of the euro currency to end at this point. Wave 3 or c should be more extensive regarding time and goals.
The market retained Friday's dynamics.
The EUR/USD pair fell by 30 basis points on Monday. For some, this may seem very little; however, the main thing is that the expected downward wave structure continues to develop. The most important thing for us is understanding that everything is going according to plan. At the moment, everything is going according to the wave scenario described by me several months ago.
Regarding the news background, I can say the following. Last week, the market had much more reason to reduce demand for the euro than to reduce demand for the dollar. It is enough to recall that another inflation report in the European Union showed a slight but noticeable slowdown. Jerome Powell made it clear that monetary policy easing in March is unlikely. Moreover, there is no certainty that the rate will start to decline even in May. Now, the market is much more cautious in its expectations and forecasts. After Powell's speech on Thursday, many major banks and companies changed their forecasts for the first rate cut to May-June. Consequently, no one is confident that the rates will even start to decrease in May.
On Monday, business activity indices for the service sectors of Germany and the European Union were released in final estimates, which are objectively less significant for the market than preliminary ones. Therefore, the market did not notice them, although both reports were weaker than initial forecasts. The demand for the euro currency will decline gradually.
Based on the analysis conducted, I conclude that the construction of a bearish wave set continues. Wave 2 or b has taken a completed form; therefore, in the near future, I expect the continuation of the impulse downward wave 3 or c with a significant decrease in the pair. The unsuccessful attempt to break the level of 1.1125, corresponding to 23.6% according to Fibonacci, indicated the market's readiness for sales a month ago. I am currently only considering sales with targets around the calculated level of 1.0462, corresponding to 127.2%, according to Fibonacci.
On a larger wave scale, it can be seen that the assumed wave 2 or b, which in length is already more than 61.8% according to Fibonacci of the first wave, may be completed. If this is indeed the case, then the scenario with the construction of wave 3 or c and the decline of the pair below 1.04 has begun to be implemented.
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