The wave analysis of the 4-hour chart for the euro/dollar pair remains not quite standard but has practically stayed the same in recent weeks. During these weeks, the quotes began to retreat from the previously reached highs, so the three-wave upward structure can be considered complete. The entire ascending trend segment may still take on a five-wave corrective look, but I expect a new downward trend segment to be built, which will likely turn out to be a three-wave. Recently, I expect the pair to hover around the 5th figure, where the increase in the European currency once began.
The upper point of the last trend segment was only a few dozen points higher than the highest point of the previous upward segment. Since December of last year, the pair's movement can be considered horizontal, and this nature of movement will continue. For the past 2–2.5 months, demand for the euro has been constantly growing, but I repeatedly pointed out that the news background for the euro was not strong enough for it to rise in price so much. However, now it becomes clear: building a convincing set of ascending waves was necessary before a descending one.
Demand for the euro continues to decrease.
The euro/dollar pair fell by 70 basis points on Thursday and generally continues to build a downward trend, which I have long waited for. In the first half of the day, there was no news background, but in the second half, information began to come in that, perhaps, partly caused a decrease in demand for the euro. The Vice President of the ECB, Luis de Guindos, gave a speech. In his speech, he touched upon the problem of high inflation in the service sector, noting various investment funds as the most significant risk for the European economy. ECB President Christine Lagarde also spoke, but highlighting anything important in her speech took a lot of work. In the intervals between meetings of the central bank, officials speak quite often and simply cannot surprise the markets with each of their performances.
US economic statistics turned out to be stronger than the market expected. The number of initial jobless claims was 242,000, with market expectations of 254–270 thousand (supporting the dollar), and the Philadelphia Manufacturing Business Activity Index was -10.4 in May, with market expectations of around -20. Both reports could have increased demand for US currency. Given all the above, the pair moved today following the news background and the current wave marking. Several FOMC representatives will give speeches in the US a little later, but their statements are unlikely to be filled with important information either. The Fed presumably finished the tightening process, but this is not a hindrance for the dollar, as the ECB is also close to this point.
Based on the analysis, an upward trend segment is formed. Therefore, I suggest selling, as the pair has quite a large space for a decline. The targets around 1.0500–1.0600 can be considered quite realistic. With these goals, I advise selling the pair on MACD indicator reversals "down."
On a larger wave scale, the wave marking of the ascending trend segment took an extended form but is likely completed. We saw five waves, which are most likely an a-b-c-d-e structure. The formation of the downward trend segment may still need to be completed, and it can take any form in structure and length.