EUR/USD. Analysis for February 26. The recession in Germany has begun
February 26, 2023 3:22 pm
The 4-hour chart for the euro/dollar pair still shows the same wave pattern, which is excellent because it allows us to predict how the situation will develop. Although its amplitude would be more appropriate for the impulsive section, the upward section of the trend has been corrected. The wave pattern a-b-c-d-e that we were able to obtain features a wave e that is far more complex than the other waves. If the wave analysis is accurate, then this pattern’s development is complete, and wave e was far longer than any other wave. I still anticipate a significant decrease in the pair because we are expected to develop at least three waves downward. The demand for the euro currency was persistently high throughout the first few weeks of 2023, and during this time the pair was only able to deviate marginally from previously reached peaks. The US currency did, however, manage to escape market pressure at the beginning of February, and the present detachment of quotes from the peaks reached can be viewed as the start of a new downward trend section, which I was simply hoping for. I hope that the current news situation and market sentiment will not impede the formation of a downward series of waves this time.
The European economy is beginning to show signs of a recession.
On Friday, the euro/dollar pair fell by a further 50 basis points. The pair has been losing value for a while now, but the value of the euro is slowly declining rather than collapsing. By 20 points, 30 points, or even a few more points at times. Yet, the movement is steady and fully corresponds to the wave analysis for the moment. Let me remind you that the strength of the downward trend’s third wave depends on the strength of the downward trend’s first wave. As a result, there is a strong likelihood that the European currency will reach parity again in the upcoming months.
Germany published a report on GDP for the final value of the fourth quarter on Friday. Against market expectations for a 0.2% decline, the GDP contracted by 0.4%. Because there was no decline in the previous quarter (the third), the fourth quarter was the first in which the German economy declined rather than grew. Given how much has been discussed recently, I believe that a recession is just getting started. The German economy is the strongest in the European Union, and it sets the tone for the rest of the country. To a certain, the European economy will start to contract as well, but the recession may only be mild and short-lived. The losses in the EU may be even fewer, even though it is not anticipated that the UK’s GDP will decline by more than 1% overall. But, the US economy is not suffering at the same time; on the contrary, it is growing. Also, the Fed’s stance on monetary policy is constantly tightening. Hence, in my opinion, the news context perfectly supports the rise in demand for the US dollar. As a result, the pair can keep falling. If this is the case, then the 38.2% and 50.0% Fibonacci levels will be reached next week.
Conclusions in general
I draw the conclusion that the upward trend section’s development is finished based on the analysis. As a result, it is now allowed to take into account sales with targets close to the predicted mark of 1.0284, or 50.0% Fibonacci. Although there is still a chance that the upward trend section will become even more complicated, the chart currently shows what might be the start of a new downward trend segment.
On the older wave scale, the ascending trend section’s wave pattern has grown longer but is likely finished. The a-b-c-d-e pattern is most likely represented by the five upward waves we observed. The downward trend’s development has already started, and it might have any size or structure.
The material has been provided by InstaForex Company – www.instaforex.com
The 4-hour chart for the euro/dollar pair still shows the same wave pattern, which is excellent because it allows us to predict how the situation will develop. Although its amplitude would be more appropriate for the impulsive section, the upward section of the trend has been corrected. The wave pattern a-b-c-d-e that we were able to obtain features a wave e that is far more complex than the other waves. If the wave analysis is accurate, then this pattern’s development is complete, and wave e was far longer than any other wave. I still anticipate a significant decrease in the pair because we are expected to develop at least three waves downward. The demand for the euro currency was persistently high throughout the first few weeks of 2023, and during this time the pair was only able to deviate marginally from previously reached peaks. The US currency did, however, manage to escape market pressure at the beginning of February, and the present detachment of quotes from the peaks reached can be viewed as the start of a new downward trend section, which I was simply hoping for. I hope that the current news situation and market sentiment will not impede the formation of a downward series of waves this time.
The European economy is beginning to show signs of a recession.
On Friday, the euro/dollar pair fell by a further 50 basis points. The pair has been losing value for a while now, but the value of the euro is slowly declining rather than collapsing. By 20 points, 30 points, or even a few more points at times. Yet, the movement is steady and fully corresponds to the wave analysis for the moment. Let me remind you that the strength of the downward trend’s third wave depends on the strength of the downward trend’s first wave. As a result, there is a strong likelihood that the European currency will reach parity again in the upcoming months.
Germany published a report on GDP for the final value of the fourth quarter on Friday. Against market expectations for a 0.2% decline, the GDP contracted by 0.4%. Because there was no decline in the previous quarter (the third), the fourth quarter was the first in which the German economy declined rather than grew. Given how much has been discussed recently, I believe that a recession is just getting started. The German economy is the strongest in the European Union, and it sets the tone for the rest of the country. To a certain, the European economy will start to contract as well, but the recession may only be mild and short-lived. The losses in the EU may be even fewer, even though it is not anticipated that the UK’s GDP will decline by more than 1% overall. But, the US economy is not suffering at the same time; on the contrary, it is growing. Also, the Fed’s stance on monetary policy is constantly tightening. Hence, in my opinion, the news context perfectly supports the rise in demand for the US dollar. As a result, the pair can keep falling. If this is the case, then the 38.2% and 50.0% Fibonacci levels will be reached next week.
Conclusions in general
I draw the conclusion that the upward trend section’s development is finished based on the analysis. As a result, it is now allowed to take into account sales with targets close to the predicted mark of 1.0284, or 50.0% Fibonacci. Although there is still a chance that the upward trend section will become even more complicated, the chart currently shows what might be the start of a new downward trend segment.
On the older wave scale, the ascending trend section’s wave pattern has grown longer but is likely finished. The a-b-c-d-e pattern is most likely represented by the five upward waves we observed. The downward trend’s development has already started, and it might have any size or structure.
The material has been provided by InstaForex Company – www.instaforex.com
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