The wave analysis of the 4-hour chart for the euro/dollar pair remains unchanged. Over the past year, we have observed only three wave structures that consistently alternate with each other. At the moment, the construction of another three–wave downward trend is continuing. The expected wave 1 is completed, wave 2 or b has become more complicated three or four times, but at this time it can still be considered conditionally completed, since the decline of the instrument has been going on for more than a month.
The upward section of the trend can still be resumed, but its internal structure will be completely unreadable in this case. Let me remind you that I try to identify clear and unambiguous wave structures that do not tolerate ambivalent interpretation. If the current wave marking is correct, then the market has moved to the formation of wave 3 or C. A successful attempt to break through the 1.0788 mark, which corresponds to 76.4% Fibonacci, once again confirmed the market's readiness to sell. Now the nearest target is 1.0637, which equates to 100.0% Fibonacci. However, I do not expect the decline of the euro currency to end there. Wave 3 or c should be much more extensive in time and targets.
The European session went smoothly.
The euro/dollar pair's rate increased by just a few points on Friday. The changes are very insignificant, so there was no movement today. Even over the past few days, the euro currency rate has grown so weakly that there were no attempts to break the nearest price level. An unsuccessful attempt to break through the level of 1.0788, corresponding to 76.4% according to Fibonacci, indicates the market's readiness for new sales. However, several reports will be released today that may affect the dollar's rate and market sentiment.
I remind you that data on industrial production and retail trade were released yesterday in the United States. Both reports were unexpectedly much worse than expected, so demand for the dollar sharply decreased in the second half of the day. Something similar may be observed today. Reports on the number of approved applications for new construction and the Producer Price Index will be released in the next few minutes. If these reports do not show significant discrepancies with forecasts, there will likely be no market reaction. However, if the market's expectations are not met similarly to yesterday, the dollar may also decline on Friday.
Certainly, reports may come out better than expected. I want to say that in the next 2-3 hours, news background may affect the pair's movement. The Consumer Sentiment Index from the University of Michigan, expected to increase slightly compared to January, will be the last to be released. The decline seems more logical if we only look at the wave analysis.
Based on the conducted analysis, the construction of a downward wave set continues. Wave 2 or b has taken a completed form, so in the near future, I expect to continue building an impulsive descending wave 3 or c with a significant decrease in the pair. An unsuccessful attempt to break through the level of 1.1125, corresponding to 23.6% according to Fibonacci, indicated the market's readiness for sales a month ago. I consider only sales with targets around the calculated level of 1.0462, corresponding to 127.2% according to Fibonacci.
On a larger wave scale, it can be seen that the presumed wave 2 or b, which in length is already more than 61.8% according to Fibonacci from the first wave, may be completed. If this is the case, the scenario of building wave 3 or c and lowering the pair below the 4th figure has begun to unfold.