FX.co ★ Analysis of EUR/USD on May 13, 2021. US PPI jumped higher in April

The wave counting on the 4-hour chart is still completely understandable and does not require any additions. Looking at the supposed wave 1 as part of the new upward trend section, it becomes clear that the third wave or c is also likely to turn out to be quite extended. A very small wave 2 speaks indirectly in favor of this. Thus, the retreat of quotes from the highs reached around the 23.6% Fibonacci level is probably only an internal corrective wave in the composition of the future 3. If so, then an increase in quotes within wave 3 in 3 can resume from the current positions. An unsuccessful attempt to break through the 38.2% level will also indirectly indicate that the markets are ready for new purchases of the Euro/Dollar instrument. There are still no alternative wave counting options since they are simply not required. They may be required only in case of a successful attempt to break the 38.2% level. In this case, the assumed wave 2 can be interpreted more difficult.

There was no interesting news in the EU on Thursday. Although I have already said that the news background now has a lower priority in determining the further dynamics of the instrument's movement. Markets reacted quite violently yesterday to the US inflation report. However, this report is already behind us. As a result of this report, the dollar slightly strengthened its positions, but, according to the current wave counting, it will resume its decline in the coming days. Thus, inflation accelerating to 4.2% is unlikely to help the US currency. Today, the US has already released reports on the number of initial applications for unemployment benefits (473,000) and on the number of secondary applications (3.655 million). Both values are slightly better than the previous ones, but the deviations are minimal. Also today, the producer price index was released, which accelerated to 6.2% YoY in April. Markets reacted with a slight decrease in demand for the US dollar, which by and large contradicts yesterday's market reaction to the inflation report. The same is true for the producer price index, excluding food and energy prices. It rose to 4.1% YoY. Thus, any indicators of inflation are rising, but the markets do not have a clear strategy to trade with such data. The US dollar rose yesterday, today it has already declined (though not much). From my point of view, now we should wait for the comments of the FOMC representatives on this matter or Jerome Powell himself. It is unlikely that their rhetoric will change dramatically in one month, but nevertheless. FOMC representatives Thomas Barkin, Christopher Waller, and James Bullard are due to speak today.

Based on the analysis, I still expect the construction of an upward trend. At this time, the construction of the corrective wave 2 or b could have already been completed. Thus, I recommend now to buy the instrument with targets located near the 23rd figure and higher, counting on the formation of a wave 3 or c. There are no reasons to revise the current wave counting yet.

The wave counting of the upward trend section is still quite complete, in a five-wave form, and is not going to get complicated yet. But the part of the trend, which began its construction immediately after it, took on a corrective and fully completed form. If the current wave counting is correct, then the construction of a new upward trend section has now begun and its two first waves have recently been completed.