FX.co ★ Analysis of EUR/USD on June 8. Markets ignored the GDP report, which showed an improvement over previous estimates

On the four-hour chart, the wave pattern of the EUR/USD pair has slightly gotten confusing lately, but the quotes' exit from the lows reached on June 4 preserves the integrity of the current wave pattern. We have received a three-wave wave 4, and if the current wave pattern is correct, then the expected wave 5 of the upward trend section begins to form. And although the internal wave pattern of the proposed wave 3 remains very doubtful, 5 waves are still clearly visible inside this wave. Therefore, there is currently no reason to make adjustments to the current wave pattern. If the decline in quotes continues next week, then it will be possible to really talk about making adjustments, since in this case, wave 4 will take an even more complex form and will simply not fit into the wave picture of the entire upward section of the trend that started from March 31.

The news background on Tuesday was very weak, even though the EU has released a significant report – GDP for the first quarter of 2020. Compared to the second estimate, the value of this indicator was revised for the better. The second estimate was for a 1.8% y/y reduction, while the third estimate was for a 1.3% y/y reduction. In addition, while the second estimate was for a 0.6% q/q decline, the third estimate is for a 0.3% q/q decline. This is good news for the Euro currency, which could cause an increase in demand, but this strangely did not happen. The markets, which are looking for any reason for new dollar sales, did not take advantage of the excellent opportunity to buy the euro today. This behavior still casts doubt on their ability to work out the current wave pattern, which suggests a continuation of the rise in the instrument quotes. There will be other important events and reports this week. So now, the hope is on them. On Thursday, the US will release the inflation data for May, which may accelerate even more compared to April. This may lower demand for the US dollar. On that same day, the results of the ECB meeting will be summed up, and in the case of positive rhetoric from Christine Lagarde and some hints of tightening monetary policy, the markets will also have reasons to increase demand for the Euro. This is the scenario that is needed to build wave 5 of the upward trend section as a result.

Based on the analysis, the quotes of the instrument are still expected to rise, although the current wave pattern is quite uncertain. In any case, it is still recommended to buy the instrument with targets located around the levels of 1.2300 and 1.2340, for each MACD upward signal, but now, a new decline in quotes may lead to the need to make adjustments to the current wave pattern.

The wave pattern of the upward trend section is still quite complete. The section of the trend, which started to form immediately after it, took on a corrective and also fully completed form. If the current wave pattern is correct, then the construction of a new section of the upward trend continues and its first two waves have completed.