Analysis of EUR/USD on July 17th. A gloomy start to the new week for the dollar
July 17, 2023 4:22 pm
The wave analysis on the 4-hour chart for EUR/USD has undergone another transformation, but it remains clear. The upward trend that began last year has taken on a complex structure, with alternating three-wave patterns observed over the past six months. I have consistently mentioned that I expect the pair to be near the 5th figure, where the upward three-wave structure originated. I still stand by my words, but now we need to wait for the completion of the current three-wave structure.
The trend segment that started on May 31 could develop into an impulsive five-wave pattern, but speaking about it with confidence is challenging now. The news background cannot justify a 300 basis point rise for the euro currency in a week. A successful attempt to break through the level of 1.1172, corresponding to 127.2% Fibonacci, indicates the market’s readiness to continue buying with targets around the calculated level of 1.1349, equivalent to 161.8% Fibonacci. However, wave C appears to be fully completed.
The dollar concluded trading last Thursday.
On Monday, the exchange rate of the euro/dollar pair remained virtually unchanged, with a range of movements of 22 basis points throughout the day. In other words, there was no market movement on Friday; the same goes for Monday. Considering the news calendar, such market behavior seems quite reasonable. On Friday, the only report was the US consumer sentiment index; today, the calendar is empty. Christine Lagarde delivered a speech early Monday morning, but there have yet to be any significant movements. Recent speeches by the ECB president needed more important information. The market eagerly anticipates the ECB meeting and factoring in the possibility of a new tightening monetary policy. However, the euro should have already completed its ascent.
There will be a few important events this week. Monday is devoid of significant events, Tuesday will only have a few less important reports from the US, and Wednesday will bring EU inflation data for June along with a few more relatively unimportant reports from the US. EU inflation may seem like a significant event, but it is the final assessment of the indicator, and the market is already aware of the preliminary estimate. Considering everything mentioned above, the first half of the week may be very calm and even uneventful. After a strong surge last week, the euro currency may start to pull back from the attained peaks, but this correction could have already started on Friday. Currently, I don’t observe even a minor correction. This indicates that the market remains in a “low start” position and could resume buying anytime.
General conclusions.
Based on the analysis, constructing an ascending wave pattern is still ongoing, but it could reach completion at any moment. I still find targets around 1.0500-1.0600 quite realistic, and I recommend selling the pair with these targets in mind. However, we now need to wait for the completion of the A-B-C structure and anticipate a decline toward the specified range. Buying at the moment carries significant risk. The euro currency takes advantage of any opportunity for an increase, but the news background for the dollar is stronger than it may appear.
On a larger wave scale, the wave analysis of the ascending trend has acquired an extended form, but it is likely approaching completion. We have witnessed five upward waves, which most likely form the A-B-C-D-E structure. Subsequently, the pair built three wave patterns: downward and upward. It is likely in the process of constructing another ascending three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis on the 4-hour chart for EUR/USD has undergone another transformation, but it remains clear. The upward trend that began last year has taken on a complex structure, with alternating three-wave patterns observed over the past six months. I have consistently mentioned that I expect the pair to be near the 5th figure, where the upward three-wave structure originated. I still stand by my words, but now we need to wait for the completion of the current three-wave structure.
The trend segment that started on May 31 could develop into an impulsive five-wave pattern, but speaking about it with confidence is challenging now. The news background cannot justify a 300 basis point rise for the euro currency in a week. A successful attempt to break through the level of 1.1172, corresponding to 127.2% Fibonacci, indicates the market’s readiness to continue buying with targets around the calculated level of 1.1349, equivalent to 161.8% Fibonacci. However, wave C appears to be fully completed.
The dollar concluded trading last Thursday.
On Monday, the exchange rate of the euro/dollar pair remained virtually unchanged, with a range of movements of 22 basis points throughout the day. In other words, there was no market movement on Friday; the same goes for Monday. Considering the news calendar, such market behavior seems quite reasonable. On Friday, the only report was the US consumer sentiment index; today, the calendar is empty. Christine Lagarde delivered a speech early Monday morning, but there have yet to be any significant movements. Recent speeches by the ECB president needed more important information. The market eagerly anticipates the ECB meeting and factoring in the possibility of a new tightening monetary policy. However, the euro should have already completed its ascent.
There will be a few important events this week. Monday is devoid of significant events, Tuesday will only have a few less important reports from the US, and Wednesday will bring EU inflation data for June along with a few more relatively unimportant reports from the US. EU inflation may seem like a significant event, but it is the final assessment of the indicator, and the market is already aware of the preliminary estimate. Considering everything mentioned above, the first half of the week may be very calm and even uneventful. After a strong surge last week, the euro currency may start to pull back from the attained peaks, but this correction could have already started on Friday. Currently, I don’t observe even a minor correction. This indicates that the market remains in a “low start” position and could resume buying anytime.
General conclusions.
Based on the analysis, constructing an ascending wave pattern is still ongoing, but it could reach completion at any moment. I still find targets around 1.0500-1.0600 quite realistic, and I recommend selling the pair with these targets in mind. However, we now need to wait for the completion of the A-B-C structure and anticipate a decline toward the specified range. Buying at the moment carries significant risk. The euro currency takes advantage of any opportunity for an increase, but the news background for the dollar is stronger than it may appear.
On a larger wave scale, the wave analysis of the ascending trend has acquired an extended form, but it is likely approaching completion. We have witnessed five upward waves, which most likely form the A-B-C-D-E structure. Subsequently, the pair built three wave patterns: downward and upward. It is likely in the process of constructing another ascending three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
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