A wave layout in a 4-hour chart for EUR/USD looks rather clear-cut and easy to understand at the moment. The trading instrument is extending its climb for a few days straight, though with minor fluctuations. This move looks like a separate wave which could be the first one inside a new section of the uptrend. Therefore, currently the expected wave C and the whole upward section can be considered complete. If this assumption is true, EUR/USD will continue its climb with targets at near 1.20 and a bit higher at 1.2065 that correspond to 50.0% and 38.2% Fibonacci levels. The ultimate targets of the whole upward section are located close to the highs of the previous upward price action on conditions that this upward section is viewed as a correction. IF EUR/USD gains momentum, the price will jump above 1.2250. At present, I don't reckon the scenario of the complicated downward section.
On Tuesday, the information background for EUR/USD is extremely weak. The economic calendar is empty in terms of economic data for the US or the Eurozone. Nevertheless, some events in the US are worthy of the market's attention. Yesterday, market participants found out that Republicans and Democrats reached the bi-partisan agreement on the infrastructure plan proposed by Joe Biden. Thus, the new relief package for the US economy is likely to get the green light from US lawmakers. The thing is that its size differs significantly from that one proposed by the US President a few months ago. Joe Biden suggested a stimulus package worth $2.2 trillion. However, the House of Representatives approved the package in the amount of just $1.2 trillion. Importantly, earlier Joe Biden's administration insisted on a tax hike for wealthy Americans and large corporations. The new agreement does not set out that the relief package will be funded through tax increases. It seems that the House managed to avoid this crucial move.
The new infrastructure draft should serve interests of Republicans who lobby large US businesses and act on behalf of rich Americans and lobby interests. So, they flatly rejected a tax hike. On the other hand, Democrats are disappointed with the stimulus size worth $1.2 trillion as they consider this a petty amount. The news benefits first and foremost the US stock market. The US dollar and the currency market gave no response to the news. All in all, this is the market catalyst for a while. Later on the week, investors are anticipating reports of major importance, ADP employment report and US nonfarm payrolls for July.
Based on my wave analysis, I'd like to make a conclusion that downward wave C is over. Thus, as I said earlier, currently traders can buy the currency pair with targets located at the nearest Fibonacci levels. Such levels are 1.1919 and 1.1983 that correspond to 61.8% and 50.0% Fibonacci levels. Besides, I would recommend opening long positions on EUR/USD whenever MACD indicator generates a bullish signal. Nevertheless, we have to admit that the downward section could turn more complicated and lengthy. At the moment, I rule out this scenario even as alternative.
The wave layout at longer timeframes looks quiet convincing. Now we see 3 three-wave sections which are roughly the same in size. This makes me believe that the last downward section is actually complete. If so, we can expect EUR/USD to rise by 200-300 pips in the coming weeks.