EUR/USD. Analysis for June 26th. It’s going to be an exciting week
June 26, 2023 5:22 pm
The wave analysis on the 4-hour chart for the euro/dollar pair continues to remain non-standard but reasonably understandable. The ascending trend segment, which started on March 15, may take on a more complex structure. Still, at the moment, I expect the formation of a descending trend segment, which is likely to be a three-wave structure as well. Recently, I have consistently mentioned that I expect the pair to be near the 1.5 figure, from where the formation of an ascending three-wave pattern began. I still stand by my words. The presumed wave b may have completed its formation this week, as indicated by the retreat of quotes from the recent highs over the past few days.
However, in light of recent events, especially the movements of the GBP/USD pair, I have developed an alternative wave analysis that suggests that the entire trend segment between March 15 and April 26 is one wave, wave a. If this is indeed the case, then the next wave would be wave b, and we are currently witnessing the formation of an ascending wave c. In this case, the wave analysis for the British pound and the euro coincide, and everything falls into place. If this assumption is correct, the euro will continue to move towards the 1.1 figure and higher.
Lagarde’s speech and inflation report
On Monday, the euro/dollar pair’s exchange rate increased by just five basis points, and the amplitude of movements was practically negligible. There was no news background today, so the market’s weak desire to trade is understandable. However, there will be many important events this week that I advise readers to pay attention to. ECB President Christine Lagarde will speak at the annual economic forum tomorrow, and the market is closely monitoring her comments. Market expectations for the ECB rate exceed the “baseline scenario,” so any hints of a more prolonged rate hike can support demand for the euro. The current wave analysis does not imply a new increase in the euro, so it is preferable not to wait for hawkish statements from Lagarde.
Also, the European inflation report will be released this week, which may lower market expectations for the rate. According to forecasts, the Consumer Price Index in June will decrease from 6.1% to 5.6%, while core inflation, on the contrary, will increase from 5.3% to 5.5%. If the forecasts come true, it will be difficult to conclude whether inflation is rising or falling. Predicting the market’s reaction to ambiguous data will be even more challenging. It will also be difficult to anticipate the ECB’s actions in the autumn and winter. The market is confident that the rate will increase by 25 basis points at the July meeting, but it is uncertain about further tightening. The current inflation figures are far from the target, so the ECB may adopt a more hawkish rhetoric. However, the central bank has not started doing so yet, so the pair may have time to form the necessary descending wave.
General conclusions.
Based on the analysis conducted, the formation of a new descending trend segment continues. The pair once again has a significant potential for decline. I still consider targets around 1.0500-1.0600 quite realistic, and I advise selling the pair with these targets. I believe there is a reasonably high probability of completing the formation of wave b, and the MACD indicator has already generated two “down” signals. According to the alternative wave analysis, the current wave would be more extensive. Still, after its completion, a descending trend segment will begin, so I do not recommend buying now.
On a higher wave scale, the wave analysis of the ascending trend segment took on an extended form but is likely complete. We have seen five upward waves, which most likely form the structure of a-b-c-d-e. Furthermore, the pair have constructed two three-wave patterns, downward and upward. It is likely in the process of forming another descending three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
The wave analysis on the 4-hour chart for the euro/dollar pair continues to remain non-standard but reasonably understandable. The ascending trend segment, which started on March 15, may take on a more complex structure. Still, at the moment, I expect the formation of a descending trend segment, which is likely to be a three-wave structure as well. Recently, I have consistently mentioned that I expect the pair to be near the 1.5 figure, from where the formation of an ascending three-wave pattern began. I still stand by my words. The presumed wave b may have completed its formation this week, as indicated by the retreat of quotes from the recent highs over the past few days.
However, in light of recent events, especially the movements of the GBP/USD pair, I have developed an alternative wave analysis that suggests that the entire trend segment between March 15 and April 26 is one wave, wave a. If this is indeed the case, then the next wave would be wave b, and we are currently witnessing the formation of an ascending wave c. In this case, the wave analysis for the British pound and the euro coincide, and everything falls into place. If this assumption is correct, the euro will continue to move towards the 1.1 figure and higher.
Lagarde’s speech and inflation report
On Monday, the euro/dollar pair’s exchange rate increased by just five basis points, and the amplitude of movements was practically negligible. There was no news background today, so the market’s weak desire to trade is understandable. However, there will be many important events this week that I advise readers to pay attention to. ECB President Christine Lagarde will speak at the annual economic forum tomorrow, and the market is closely monitoring her comments. Market expectations for the ECB rate exceed the “baseline scenario,” so any hints of a more prolonged rate hike can support demand for the euro. The current wave analysis does not imply a new increase in the euro, so it is preferable not to wait for hawkish statements from Lagarde.
Also, the European inflation report will be released this week, which may lower market expectations for the rate. According to forecasts, the Consumer Price Index in June will decrease from 6.1% to 5.6%, while core inflation, on the contrary, will increase from 5.3% to 5.5%. If the forecasts come true, it will be difficult to conclude whether inflation is rising or falling. Predicting the market’s reaction to ambiguous data will be even more challenging. It will also be difficult to anticipate the ECB’s actions in the autumn and winter. The market is confident that the rate will increase by 25 basis points at the July meeting, but it is uncertain about further tightening. The current inflation figures are far from the target, so the ECB may adopt a more hawkish rhetoric. However, the central bank has not started doing so yet, so the pair may have time to form the necessary descending wave.
General conclusions.
Based on the analysis conducted, the formation of a new descending trend segment continues. The pair once again has a significant potential for decline. I still consider targets around 1.0500-1.0600 quite realistic, and I advise selling the pair with these targets. I believe there is a reasonably high probability of completing the formation of wave b, and the MACD indicator has already generated two “down” signals. According to the alternative wave analysis, the current wave would be more extensive. Still, after its completion, a descending trend segment will begin, so I do not recommend buying now.
On a higher wave scale, the wave analysis of the ascending trend segment took on an extended form but is likely complete. We have seen five upward waves, which most likely form the structure of a-b-c-d-e. Furthermore, the pair have constructed two three-wave patterns, downward and upward. It is likely in the process of forming another descending three-wave structure.
The material has been provided by InstaForex Company – www.instaforex.com
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