31.03.202118:24 Forex Analysis & Reviews: Analysis of EUR/USD on March 31, 2021. EU inflation cut the nascent upward wave

The wave counting on the 4-hour chart is still quite unambiguous and looks quite understandable. I have said more than once in recent months that I expect the instrument to move in three-wave structures, which on the higher chart will be represented by the a-b-c-d-e structure. At the moment, this assumption is 100% fulfilled. I expected that below the 76.4% Fibonacci level, the instrument would not be able to continue to decline, but the markets still managed to successfully break through this level. Thus, now I expect a further decline in the quotes of the instrument with targets located near the level of 100.0% Fibonacci. After the completion of the supposed wave c to e, I expect the formation of a new upward trend. It is not yet clear what form this section will take. In any case, you must first wait for the completion of the current section of the trend, and then think about how the next one might turn out.

In the first two days of this week, there is not even much to remember. The news background was so weak, rather even absent. Everything was so bad and sad that the markets again began to pay attention to secondary factors, such as rising Treasury yields or the lack of a coherent vaccination strategy in the European Union. This is not to say that these are not the reasons, but still, everyone is more accustomed to the fact that currencies are influenced by market factors or economic factors, and not by the rate of vaccination and the yield of Treasury bonds. The situation has gotten a little more interesting today. In the morning, the European Union released a report on inflation for March, which markets expected to rise to 1.4% on an annualized basis. However, in reality, inflation accelerated only to 1.3% y/y, and the core consumer price index (excluding the cost of food and energy) and dropped to 0, 9% y/y. What does this mean? The fact that the acceleration of the main indicator of inflation occurred precisely due to the growth in the cost of energy carriers. After all, oil prices have risen significantly in recent months. However, this is clearly not the inflation that the ECB is aiming for. In the next month, the price of oil may decline, falling in response to the main indicator of inflation. It turns out that the current inflation depends on oil and gas? It is not right. The markets felt the same way and preferred to start new sales of the euro, which for the time being postponed the construction of a new upward wave and the completion of the current downward trend section. A conflict may soon arise between the wave analysis and the news background since the current trend segment should end, but the news background does not yet allow the euro to start rising.

Based on the analysis, I temporarily abandon the scenario with purchases, as the instrument made a successful attempt to break through the 76.4% Fibonacci level. Thus, now we again recommend selling with targets near the estimated 1.1605, which equates to 100.0% Fibonacci. At the same time, the downward part of the trend is nearing its end, which should not be forgotten.

The wave counting of the upward trend section still has a fully completed five-wave form and is not going to get complicated yet. But the part of the trend, which began its construction immediately after it, takes on a corrective, but quite understandable form. Supposed wave d turned out to be shortened, therefore now the construction of the supposed wave e continues.