The wave labeling of the 4-hour chart for the euro/dollar pair continues to be non-standard but has remained relatively unchanged in recent weeks. During these weeks, quotes started to retreat from previous highs, so the three-wave upward structure can be considered complete. The entire ascending trend phase may still take on a five-wave corrective form, but at the moment, I expect the formation of a new downward trend phase, which is likely also to have a three-wave structure. Over the past few weeks, I have regularly mentioned that I expect the pair to be around the 5th figure, from where the increase in the euro currency began.
The top point of the last trend phase was only a few dozen points above the highest point of the previous upward phase. Since December of last year, the pair's movement can be considered horizontal, and such a character of movement will continue. In the past 2–2.5 months, euro currency demand has steadily increased. Still, I have repeatedly pointed out that the news background for the euro currency is not strong enough to justify such a significant price increase. However, it is now becoming clear: a convincing upward wave set had to be built to begin a downward move subsequently.
Neel Kashkari is still determining a pause.
The euro/dollar pair rose by 20 basis points on Monday. Market activity is often low on Mondays, and 20 points cannot influence wave labeling. No economic reports have been released, but the trend from the previous week of many speeches by officials from various agencies continues. Today, the President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, spoke, although this event must be reflected in the calendar. In an interview with CNBC, he stated that the FOMC has yet to decide the interest rate for June. The next meeting will determine whether to pause or raise the rate again.
Kashkari also mentioned that the rate could rise even further if inflation shows signs of stopping. The national debt is not his organization's problem, although everyone will feel the consequences of default. The banking crisis has been resolved but has not affected inflation and does not do the job instead of the Fed.
The market did not react to Kashkari's quite "hawkish" statements. This often happens since many FOMC members hold a more modest position on rates compared to Bullard or Kashkari. By the way, James Bullard and a few more colleagues are also giving a speech today. However, Monday is uneventful, and strong movements will start later in the week. The wave labeling continues to meet my expectations. Central bank meetings are behind us, so there will be no global events soon. The wave pattern should remain in place for the next few weeks.
Based on the analysis conducted, the formation of the upward trend phase is completed. Therefore, selling can be advised now, and the pair has significant room for downward movement. Targets around 1.0500-1.0600 can be considered quite realistic. With these targets in mind, I recommend selling the pair on reversals of the MACD indicator "down."
On the higher wave scale, the wave labeling of the upward trend phase has taken an extended form but is likely completed. We have seen five upward waves, most likely forming an a-b-c-d-e structure. The formation of the downward trend phase may still need to be completed, and it can take any form and length.