EUR/USD. Analysis for April 12th. The euro falls down under the pressure of the news background
April 12, 2024 4:22 pm
The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. At the moment, we observe the formation of the presumed wave 3 in 3 or c of the downtrend. If this is indeed the case, the decline in quotes will continue for a very long time, as the first wave of this segment completed its formation around the 1.0450 level. Therefore, the third wave of this trend segment should end even lower.
The market continues to slowly reduce demand for the euro currency, although, the news background fully supports the US dollar. An unsuccessful attempt to break through the 1.0955 level, which corresponds to 61.8% Fibonacci, indicated the completion of the formation of wave 2 in 3 or c. Therefore, there is potential for a decline in the pair, and it is significant.
Is there a probability of another wave analysis? There always is. However, if since October 3 of last year, we have observed a new upward trend segment, then the last downward wave does not fit into any structure, which cannot be. Therefore, an upward segment is possible only with a strong complication of wave analysis.
The Fed may lower rates even in December
.
The EUR/USD rate decreased by 15 basis points on Thursday and lost another 75 today. Thus, in three days, the euro currency has depreciated by 210 points, which is quite a lot, considering the activity of the market we have seen in recent weeks and months. Last week, the market had enough reasons to reduce demand for the pair, and this week there were even more. The fact is that the ECB has practically determined the date of the first rate cut – June 2024, and the last meeting, which ended on Thursday, only confirmed this assumption. Christine Lagarde did not openly state that the regulator plans to ease policy at the next meeting, but it was read between the lines.
The second important event of this week – the US inflation report – reassured the market otherwise. The consumer price index not only did not decrease, not only did not remain unchanged, not only did not grow within expectations, it accelerated more than forecasts. Therefore, the Fed has even fewer reasons to move to a more “dovish” policy in June. Some large banks today updated their forecasts and concluded that the first rate cut could well happen in December. And even then, only if surprises with inflation cease. The ECB, on the other hand, plans to lower rates once a quarter, so the divergence between the rates of the two central banks, starting in June, will increase, which is a good reason for further growth of the dollar exchange rate.
General conclusions
Based on the analysis of EUR/USD, the construction of a bearish wave set continues. Waves 2 or b and 2 in 3 or c are completed, so in the near future, I expect the continuation of the formation of the impulsive downward wave 3 in 3 or c with a significant decline in the pair. I continue to consider selling with targets located near the calculated level of 1.0462, which corresponds to 127.2% Fibonacci, as the news background remains on the side of the dollar. The necessary sell signal near the 1.0880 level was formed.
On a larger wave scale, it can be seen that the presumed wave 2 or b, which in length exceeded 61.8% Fibonacci from the first wave so that it may be completed. If this is indeed the case, the scenario with the formation of wave 3 or c and the decline of the pair below the 1.4 figure has begun to be implemented.
The main principles of my analysis:
Wave structures should be simple and understandable. Complex structures are difficult to play out; they often bring changes.
If there is confidence in what is happening in the market, it is better to avoid entering it.
There is no one hundred percent certainty in the direction of movement, and there never can be. Remember protective stop-loss orders.
Wave analysis can be combined with other types of analysis and trading strategies.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. At the moment, we observe the formation of the presumed wave 3 in 3 or c of the downtrend. If this is indeed the case, the decline in quotes will continue for a very long time, as the first wave of this segment completed its formation around the 1.0450 level. Therefore, the third wave of this trend segment should end even lower.
The market continues to slowly reduce demand for the euro currency, although, the news background fully supports the US dollar. An unsuccessful attempt to break through the 1.0955 level, which corresponds to 61.8% Fibonacci, indicated the completion of the formation of wave 2 in 3 or c. Therefore, there is potential for a decline in the pair, and it is significant.
Is there a probability of another wave analysis? There always is. However, if since October 3 of last year, we have observed a new upward trend segment, then the last downward wave does not fit into any structure, which cannot be. Therefore, an upward segment is possible only with a strong complication of wave analysis.
The Fed may lower rates even in December
.
The EUR/USD rate decreased by 15 basis points on Thursday and lost another 75 today. Thus, in three days, the euro currency has depreciated by 210 points, which is quite a lot, considering the activity of the market we have seen in recent weeks and months. Last week, the market had enough reasons to reduce demand for the pair, and this week there were even more. The fact is that the ECB has practically determined the date of the first rate cut – June 2024, and the last meeting, which ended on Thursday, only confirmed this assumption. Christine Lagarde did not openly state that the regulator plans to ease policy at the next meeting, but it was read between the lines.
The second important event of this week – the US inflation report – reassured the market otherwise. The consumer price index not only did not decrease, not only did not remain unchanged, not only did not grow within expectations, it accelerated more than forecasts. Therefore, the Fed has even fewer reasons to move to a more “dovish” policy in June. Some large banks today updated their forecasts and concluded that the first rate cut could well happen in December. And even then, only if surprises with inflation cease. The ECB, on the other hand, plans to lower rates once a quarter, so the divergence between the rates of the two central banks, starting in June, will increase, which is a good reason for further growth of the dollar exchange rate.
General conclusions
Based on the analysis of EUR/USD, the construction of a bearish wave set continues. Waves 2 or b and 2 in 3 or c are completed, so in the near future, I expect the continuation of the formation of the impulsive downward wave 3 in 3 or c with a significant decline in the pair. I continue to consider selling with targets located near the calculated level of 1.0462, which corresponds to 127.2% Fibonacci, as the news background remains on the side of the dollar. The necessary sell signal near the 1.0880 level was formed.
On a larger wave scale, it can be seen that the presumed wave 2 or b, which in length exceeded 61.8% Fibonacci from the first wave so that it may be completed. If this is indeed the case, the scenario with the formation of wave 3 or c and the decline of the pair below the 1.4 figure has begun to be implemented.
The main principles of my analysis:
The material has been provided by InstaForex Company – www.instaforex.com
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