On the four-hour chart, the wave pattern of the EUR/USD pair remains quite vague since two corrective trend sections have already been built, and it is very possible that the formation of the third downward trend has begun. Thus, this means that not only the correction waves alternate but also the correction parts of the trend. At the moment, it is assumed that wave a of the new downward trend is done with its formation. If this is indeed the case, then the instrument has moved on to building wave b, with targets set 100-150 points higher. It is necessary to be prepared that wave b will turn out to be about the same size as wave a. After the completion of wave b, the pair may decline within the framework of wave c, although the entire trend section may take a five-wave form. In general, the current wave pattern is not in doubt. The very nature of the movement of the instrument is questionable. However, this does not mean that such a variant of the wave pattern does not have the right to exist.
The news background of this instrument was not very strong on Wednesday, although there were a sufficient number of economic reports during the day. However, it should be noted first that Jerome Powell gave a speech on Tuesday, which did not contain anything important. Nevertheless, some important things were still voiced. For example, Powell said that he is not afraid of the actions of China and Russia, which are going to abandon the US dollar. According to him, this is absolutely not a problem for either the USD or the Fed. In addition, the Fed Chairman drew the attention of congressmen to the state of the labor market, which still needs to be stimulated, and urged not to worry about high inflation rates, which is expected to decline. However, Powell also noted that he could not name the exact time when this will happen. In any case, it was clear that the Fed will continue to buy assets in the near future, and the beginning of the discussion of the curtailment of this program remains only the plans of the Fed at the moment.
On another, the EU already published its business activity indices. The business activity in the services sector rose from 55.2 points to 58.0 points, while it remained unchanged at 63.1 in the manufacturing sector. These are very high values of indicators, which slightly supported the demand for the Euro currency on Wednesday. Thus, the news background currently supports the construction of the expected wave b, which is what we need in order for the wave picture to remain complete.
Based on the analysis, the quotes of the instrument are expected to rise, but now within the correctional wave b. We should wait for the signal about the end of wave a and it may be an unsuccessful attempt to break through the level of 1.1836, which is equal to 76.4% in Fibonacci, but such a good signal may not be there. It is possible to buy the euro with targets around the levels of 1.1984 and 1.2051, which corresponds to 50.0% and 38.2% Fibonacci, for each MACD upward signal.
The wave pattern of the section of the new upward trend is not completely clear, but it is assumed to be completed now. Thus, the formation of three downward waves is expected and perhaps, the first wave is already almost done.