The wave counting on the 4-hour chart for the Euro/Dollar instrument remains rather ambiguous, since at the moment, two corrective trend sections have already been built and, most likely, the construction of the third, downward trend, has begun. If this assumption is correct, then the decline in quotes will continue with targets located near the 15th and 16th figures. At this time, the construction of the proposed wave a and possibly even wave b is presumably completed. Thus, the decline in quotations can continue directly from the current values. The internal wave pattern of the assumed wave a looks very ambiguous, but let me remind you that the internal structures of corrective waves can be very complex. It is much easier to wait for their completion than to observe the complication in each wave of the higher scale and the construction of waves of the lower scale of the same size as the higher one. And even try to make money on it.
The news background for the Euro/Dollar instrument was extremely weak on Monday. Today, speeches by representatives of the ECB, as well as representatives of the Fed were scheduled. However, there are five such speeches every day, which does not cause any market reaction in 99% of cases. And this is exactly what happened today. Fabio Panetta, John Williams, Luis de Guindos, Thomas Barkin, and Randal Quarles did not report anything important and interesting to the markets. Therefore, the amplitude of the instrument was very weak during the day. At the beginning of a new week, I can only draw the attention of readers to what awaits us all this week.
As I said, wave counting implies a decline in instrument quotes, so we need news that will support the demand for the US dollar. The first thing to notice this week is the speech of the ECB President Christine Lagarde tomorrow. Let me remind you that Lagarde takes a very wait-and-see attitude and does not give any hints to change the parameters of monetary policy. The European Central Bank is now the farthest away from a rate hike and PEPP rate cut. Thus, Lagarde's comments can put pressure on the European currency, which is what we need.
On Wednesday, the European Union will release the consumer price index for July. Since inflation is now growing in the EU, the US, and the UK, it can be assumed that it will accelerate above 2.0%. And any rise in inflation is a negative factor for the currency. Thus, on Wednesday, the news background may also be on the side of the US dollar. The situation will be more difficult on Thursday and Friday, as more important reports will be released.
Based on the analysis, I still expect a new decline in the instrument quotes within the expected wave c. The supposed wave b may have completed its construction. Thus, I recommend selling the euro with targets located near the calculated levels of 1.1836 and 1.1704, which equates to 76.4% and 100.0% Fibonacci.
The wave counting of the new upward trend section is not entirely unambiguous, however, at this time, it is presumably completed and has taken on a three-wave form. Thus, now I am waiting for the construction of three downward waves, the first wave may already be nearing its completion, and the second is in the process of its construction.