The wave marking of the 4-hour chart for the euro/dollar instrument continues to look convincing. The proposed wave 4 took a five-wave form and turned out to be completely different from wave 2. Nevertheless, now this wave is recognized as complete, and the wave pattern does not require any changes. Accordingly, the instrument has started and continues to build the expected wave 5-E. If this assumption is correct, then the decline in the quotes of the euro currency may continue for several more weeks. At the moment, the entire wave structure of the descending trend section looks almost fully equipped, but wave 5-E is likely to also take a five-wave form. If this is the case, then at the moment, the construction of only the first wave consisting of 5-E has been completed. If this does not happen, then the quotes have not yet fallen under the low of wave 3-E, that is, wave E cannot yet be considered completed. Thus, the instrument still has a fairly strong potential for decline. The first target is around 1.0721, which equates to 200.0% Fibonacci. At the same time, much of the instrument will now depend not only on geopolitics but also on gas and oil prices and the further rupture of relations between Russia and the European Union.
The US consumer price index did not surprise the markets
The euro/dollar instrument dropped by literally 10 basis points on Tuesday (at the time of writing). However, during the day, the amplitude was also quite low, despite the release of a very important report on inflation in the United States. As expected by the market, the consumer price index rose by the end of March to 8.5% y/y. That is, so far all the actions and threats from the Fed do not affect price growth. In fairness, it should be noted that the Fed has just begun its path to the 3.5% rate and reducing the balance by at least half. Therefore, it also makes sense to wait for a decrease in inflation no earlier than in a few months. However, the very fact that this indicator is already approaching a two-digit value with confident steps suggests that the rhetoric of the FOMC representatives may become even tougher before the May meeting. And by the way, the market is now confident that the interest rate will be raised by 50 basis points. And why is the option of a 75 basis point increase not being considered if inflation continues to grow at a high rate?
On Tuesday, the most important geopolitical news related, oddly enough, not to Ukraine and not to Russia. On Monday it became known that Finland and Sweden are ready to join NATO this summer. In Russia, they openly declare the need to prevent Finland or Sweden from joining NATO, so more and more analysts and experts admit that before the beginning of summer, some of the military equipment of the Russian Federation will go to the border with Finland, and not to Ukraine. For Russia, this will only mean new problems. It will be much more difficult to fight on two fronts. Moreover, I would like to ask the people from the Kremlin a question: will a special operation be carried out against every country that wants to dispose of its freedom and independence in full? I think that within the next two months there may be an accumulation of Russian army and equipment on the border with Finland. And if this happens, it will be another military conflict in Europe.
General conclusions
Based on the analysis, I still conclude that the construction of wave 5-E. If so, now is still a good time to sell the European currency with targets located around the 1.0721 mark, which corresponds to 200.0% Fibonacci, for each MACD signal "down". In the next few days, a correction wave of 5-E may begin to be built, after which I expect a new decline in the instrument.
On a larger scale, it can be seen that the construction of the proposed wave D has been completed, and the instrument has updated its low. Thus, the fifth wave of a non-pulse downward trend section is being built, which may turn out to be as long as wave C. If this assumption is correct, then the European currency will still decline.