EUR/USD analysis. April 26. Economic statistics in the US disappointed, but the dollar is still growing

The wave counting of the 4-hour chart for the euro/dollar instrument continues to look convincing, despite several attempts to build a corrective upward wave. The instrument continues to build a descending wave 5 in E, which could be the last one in the structure of the downward trend section. If this is true, then the euro may continue to fall for several more weeks, since this wave can turn out to be very long, five-wave in its internal structure. However, it can also turn out to be shortened and already completed, as the instrument fell below the low of the previous wave 3 in E. Thus, the euro still has the potential to decline, but still can complete it at any time. Until today, the target was 1.0721, which equates to 200.0% Fibonacci, but today the instrument made a successful attempt to break through it. Thus, the market has shown that it is ready to continue selling the instrument. The internal wave structure 5 in E is ambiguous.

The euro/dollar instrument declined by another 30 basis points on Tuesday. Market activity is gradually decreasing, and the construction of a corrective upward wave may begin in the near future. But in general, the demand for the euro remains very weak and is constantly decreasing, which leads to new declines for the euro/dollar instrument. I would like to note that the market does not even need a strong economic background for a constant and continuous decline in demand for the EU currency. There was nothing on Monday, today there is only one report, but the main movement happened before it. A report on orders for durable goods was released in America, and their volume increased by 0.8% m/m in March. The market expected an increase of 1.0%. Thus, the report turned out to be slightly worse than expected, but not so much that the dollar continued to grow in the morning. The dollar should not have increased at all today based on this report, because its result turned out to be weaker than market expectations. Consequently, the market was not even waiting for this report and was not going to react to it, whatever its significance. What is driving the euro and the dollar now?

I believe that geopolitics remains the key factor for the market right now. If we recall the times when the monetary policies of the Federal Reserve and the European Central Bank differed from each other, then there was no such serious advantage of one of the currencies. Let me remind you that before the pandemic crisis, the Fed rate was 2.5%. At the same time, the ECB rate was the same 0%. However, in 2016-2019, the euro showed only periods of decline against the dollar, not forgetting to show periods of increase. During these years, the euro and the dollar were in a state of equilibrium. Now, the decline in the euro currency is unlikely to depend entirely on the Fed, which has raised the rate only once so far. The FOMC has ambitious plans, but they need to be implemented first. According to the logic of what is happening, after raising the rate to 2.5%, will the euro drop to 1.0000? And when the rate rises to 3.5%, where will we see the euro? I believe that the reason for such a strong decline in demand for the euro lies mostly in the conflict between Ukraine and Russia, in which half the world is already involved in one way or another.

Based on my analysis, I still conclude that wave 5 is still building in E. If so, now is still a good time to sell the euro with targets located around 1.0355, which corresponds to 261.8% Fibonacci , for each MACD down signal. The internal corrective wave at 5 in E ended quickly.

On a larger scale, we can see that the construction of the proposed wave D has been completed, and the instrument regularly updates its lows. So now the fifth wave of a non-impulsive downward trend is being built, which can turn out to be as long as wave C. If this assumption is correct, then the euro will still decline.