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The wave count on the 4-hour chart for EUR/USD has remained unchanged for several months now, which is encouraging. Even when corrective waves form, the structure's integrity is preserved. This makes accurate forecasts possible. It should be noted that wave counts do not always look like they do in textbooks. Right now, however, the structure looks very good.
The construction of the bullish segment of the trend continues, while the news background mostly supports assets other than the dollar. The trade war launched by Donald Trump is ongoing. The confrontation with the Fed persists. "Dovish" expectations are rising. Trump's "One Big Law" will increase the U.S. national debt by 3 trillion dollars, and the U.S. president continues to raise tariffs and introduce new ones. The market assesses the results of Trump's first six months rather poorly, even though economic growth in Q2 reached 3%.
At this point, it can be assumed that wave 4 has been completed. If so, the construction of impulsive wave 5 has begun, with potential targets extending up to the 1.25 area. Of course, the corrective structure of wave 4 may still take on a more extended five-wave form, but I am proceeding from the most likely scenario.
The EUR/USD pair declined by 40 basis points during Monday; however, volatility has remained very low over the past few days. Economic reports are being released, but the market is waiting for more important events. On Friday, U.S. data on consumer sentiment, industrial production, and retail sales were published, but they left no trace on the charts of dollar pairs. From this, I conclude that market participants are expecting something bigger.
This week, only two events are worth waiting for: the results of negotiations "on the Ukrainian issue" and Jerome Powell's speech. I already wrote over the weekend about the U.S. negotiations directly related to Ukraine. For now, nothing specific is known. The parties report progress and believe the conflict can be resolved. However, as always, there are also parties that indirectly oppose ending the war. Therefore, at this point, I prefer not to draw conclusions.
Jerome Powell's speech is scheduled for Friday, and many analysts now expect a softening of the Fed Chair's rhetoric. They cite the sharp deterioration of the labor market and weak inflation as the reasons. I consider such conclusions premature at the very least. The labor market is weakening, and that is a fact. But why should Mr. Powell rush to conclusions if another labor market report will be released before the September meeting? Wouldn't it be better to draw conclusions in September? Why promise now what can be promised in September?
I would also note that although U.S. inflation remains weak, the risks of its significant acceleration are very high. The latest PPI index provided grounds to expect a sharp acceleration in price growth as early as the next report.
Based on the analysis of EUR/USD, I conclude that the pair continues to build a bullish segment of the trend. The wave count still fully depends on the news background related to Trump's decisions and U.S. foreign policy. The targets of the bullish segment may extend up to the 1.25 level. Accordingly, I continue to consider buying opportunities with targets around 1.1875, which corresponds to the 161.8% Fibonacci extension, and higher. I assume that the construction of wave 4 has been completed. Therefore, now is a good time to buy.
The basic principles of my analysis:
Díky analytickým přehledům společnosti InstaForex získáte plné povědomi o tržních trendech! Jako zákazníkovi společnosti InstaForex je Vám k dispozici velký počet bezplatných služeb umožňujících efektivní obchodování.
