The wave marking of the 4-hour chart for the euro/dollar pair has become a bit confusing recently. However, today's increase in quotes in the second half of the day by 80 basis points returns everything to its place. We have received a three-wave wave 4. And if the current wave marking is correct, then at this time, the assumed wave 5 of the upward trend section begins its construction. Thus, labor market statistics played a game with the dollar twice this week. Yesterday, a strong ADP report caused the strengthening of the US currency. Today, a weak Nonfarm - a decline. Although the internal wave marking of the proposed wave 3 remains very doubtful, five waves are visible inside this wave. Thus, at the moment, I still see no reason to make adjustments to the current wave markup. If the decline in quotes resumes next week, it will be possible to talk about making adjustments since wave 4 will take an even more complex form and will not fit into the wave picture of the entire upward section of the trend that originates on March 31.
On Friday, the news background for the euro/dollar pair was again quite strong. It all started in the morning with the report's release on retail trade in the European Union in April. It turned out that volumes decreased by 3.1% month-on-month compared to March. It created a slight pressure on the European currency, which declined by another dozen basis points. However, the markets were waiting for more statistics from the US, which was very contradictory. First of all, it should be noted that the data from America was not so bad. For example, the unemployment rate fell from 6.1% to 5.8%. Wages in May increased by 0.5% m/m and 2.0% y/y. Both reports were above market expectations.
However, the most important Nonfarm Payrolls report came out with only 559,000, which had expectations of at least 645,000. So 559 thousand new jobs outside the agricultural sector is also a very good result, which indicates an excellent pace of recovery in the US labor market. However, markets were overwhelmed with optimism after Thursday and expected to see a figure larger than the forecast. When it became known that Nonfarm did not meet the forecast, a wave of disappointment swept the market, and it began to reduce demand for the dollar. As a result, this gives the current wave markup a chance to preserve the integrity of its structure.
Based on the analysis, I still expect an increase in the quotes of the instrument, although, at this time, the wave marking raises some questions. Thus, I still recommend buying the pair with targets located near the 23rd figure and the mark of 1.2340.
The wave marking of the upward section of the trend is still quite complete. The section of the trend, which began its construction immediately after it, took on a corrective and completed form. If the current wave marking is correct, the new upward section of the trend continues, and its first two waves have ended.