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In the most global sense, the wave counting of the EUR/USD instrument has undergone certain changes. If earlier, I hoped that the upward trend section would not become more complicated, then a successful attempt to break through the previous high led to the fact that the wave counting required adjustments. Thus, the assumed wave 4 took a pronounced three-wave form, and the instrument moved to the construction of a 5 in 5 in 3 or S wave. The entire section of the trend, which begins on March 20, takes on an even more complex and extended form.
A wave counting on a smaller scale refines the data obtained from a higher scale. Since the attempt to break through the peak of the supposed wave 3 turned out to be successful, the entire wave counting took a longer form. Thus, the rise in the instrument quotes can now continue with targets located near the 323.6% Fibonacci level. Considering the fact that the demand for the euro currency remains quite high, it is possible that the markets will try to bring the instrument to the 423.6% Fibonacci level.
On Tuesday, August 18th, there was not much news in Europe and America. Nevertheless, the markets still found grounds for new purchases of the euro/dollar instrument. And these reasons are ambiguous. First, US Treasury Secretary Steven Mnuchin made it clear yesterday that Republicans and Democrats are still far from each other and cannot yet agree on a financial assistance package for the American economy. Mnuchin did not disclose any details of the talks, but he stated earlier that "the package will be agreed within a few days." It was a couple of weeks ago. Now, it is obvious that nothing will be agreed in the near future, therefore, the US economy will not receive new cash infusions in the near future. In addition, the tensions between China and America continue to escalate. Let me remind you that these countries exchanged the closure of several consulates of each other not so long ago, Washington continues to blame Beijing for deliberately releasing the pandemic, and the trade confrontation between these countries continues. So, there is no positive news from this channel. The parties are not holding new negotiations on a trade deal, and Donald Trump has completely focused his attention on the upcoming presidential elections. Naturally, all this does not increase the demand for the US currency and Donald Trump completely focused his attention on the upcoming presidential elections.
On Wednesday, the European Union released a report on inflation for July and I must say that this report turned out to be quite weak. While inflation in Britain accelerated significantly, the consumer price index in the EU remained unchanged at 0.4% y / y. The situation is slightly better with core inflation, which amounted to 1.2% y / y. As we can see, markets' expectations were in line with actual values.
General conclusions and recommendations:
The euro/dollar pair has resumed the construction of the assumed global wave 3 or C. Thus, at this time, I recommend new purchases of the instrument with targets located near the calculated level of 1.2089, which corresponds to 323.6% Fibonacci. At the same time, wave 5 in 5 in 3 or C can literally end at any moment and start building a correctional wave 4 or a new downward trend section.
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