FX.co ★ EUR/USD analysis on May 20. Fed minutes give hope to market participants

The wave layout on the 4-hour chart is completely clear and does not require any adjustments. All price movements are going exactly in accordance with the wave pattern. At this time, the construction of the wave 3 in 3 presumably continues, which can turn out to have a quite extended from. The wave 3 of the uptrend may also turn out to be rather extended, given the size of the wave 1. Thus, in the future, we can expect the continuation if the uptrend on the euro/dollar pair. A successful attempt to break through the 23.6% Fibonacci level indicates that the markets are ready to increase buy positions on the instrument. Thus, the current wave layout is good for trading and allows you to make money from it, which is the most important thing. So far, there is no reason to make any adjustments. The news background has had a very weak effect on the pair's movement and the market sentiment. The most that these reports could do is form correctional waves that in no way could violate the wave layout.

On Thursday, the news background for the euro/dollar pair was very weak. Yesterday, the instrument made an unsuccessful attempt to break through the 23.6% Fibonacci level, which once again indirectly indicates that the markets are ready for new purchases. The evening decline in quotes was associated with the release of the Fed minutes where some statements were changed compared to the previous release. This time it shows that several members of the Fed's monetary committee are considering adjusting the bond purchase program if the US economy continues to recover at a high rate. No additional information was available, but this was enough for the markets to push the euro/dollar pair down.

However, the minutes did not affect the general wave layout, and the instrument lost just about 50 base points that it won back very quickly today. As I mentioned above, there was nothing interesting for either the euro or the US dollar on Thursday. ECB President Christine Lagarde's speech once again gave no information to the markets. In the US, a report on the number of jobless claims was scheduled for today. The numbers were broadly in line with the market expectations. Minor deviations from the forecast could not affect the mood of the markets. We can also note the statement by Luis de Guindos, the Vice President of the ECB, who said that ECB members expect to see economic growth in the second quarter. However, there is nothing new in this statement. With ongoing vaccinations in the EU and the easing of coronavirus-related restrictions, it is clear that the economy will start to recover sooner or later.

Based on the analysis, I still expect the instrument to go up. At this time, the construction of the correctional wave 2 or b, as well as the internal wave 2 within the assumed wave 3, might have been completed. Thus, I recommend buying the instrument with the targets located around the mark of 23 for each buy signal of the MACD indicator. There are no reasons to revise the current wave layout yet as it looks almost perfect.

The wave layout of the ascending trend section still has a fully completed five-wave form and is not going to become more complex. The part of the trend that started to form right after that took on a completed form after a correction. If the current wave layout is correct, then the construction of a new ascending trend section has started and will continue its formation. Also, the first two waves of this section have recently been completed.