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On the four-hour chart, the wave pattern of the EUR/USD pair has slightly become confused lately and is becoming vaguer. The greatest questions are raised by the internal wave structure of the proposed wave 3. Nevertheless, there is reason to assume that the construction of this wave and the next one (wave 4) has already been completed. If this is true, then the quotes' growth will continue from the current positions within the assumed wave 5 of the upward trend section. I am still waiting for the instrument to reach the peak of the entire previous upward trend, which is around the level of 1.2350. It should also be considered that the entire section of the trend, which started on March 31, may take a more extended form than it seems now. But at the moment, an alternative version of the wave pattern is not required, as the current one is quite clear.
The news background for this instrument was extremely weak on Wednesday. In general, there was not a single important report published during the day either in the EU or in the US. The quotes declined by 60 basis points and then increased by 40 b.p. It should be noted that reversals occur when no important data was released. Thus, we can assume that Wednesday's news background had no influence on the movement of the EUR/USD pair. Nevertheless, EU producer prices in April rose by 7.6% y/y. This indicator is also quite important along with the usual inflation and shows the acceleration of the price growth process. However, this price increase is not yet reflected in the inflation indicator itself, especially in its basic version.
In turn, the consumer price index increased by 2.0% y/y only, and the core inflation did not even reach 1.0% y/y. Now, several Fed members are expected to make a speech, but it is unlikely that they will give information that will influence the market. Patrick Harker, Raphael Bostic, and Charles Evans are likely to simply share their views on US inflation and the US economic recovery, as Lael Brainard and Randal Quarles did on Tuesday. What's more interesting is the speech of the ECB President Christine Lagarde, which will only start in a few hours. This can have a fairly tangible impact on the market sentiment. Ms. Lagarde is expected to make "dovish" statements so that the current wave pattern will continue to be executed.
Based on the analysis, the quotes of the instrument are still expected to rise, although the current wave pattern is quite uncertain. In any case, it is still recommended to buy the instrument with targets located around the levels of 1.2300 and 1.2340, for each MACD upward signal, but now, a further decline in quotes (which will not prevent trading on the increase, since the MACD will be directed down) can lead to the need to make adjustments to the current wave pattern.
The wave pattern of the upward trend section is still quite complete. The section of the trend, which started to form immediately after it, took on a corrective and also fully completed form. If the current wave pattern is correct, then the construction of a new section of the upward trend continues and its first two waves have completed.
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