FX.co ★ EUR/USD. Analysis for July 10th. Monday did not allow the dollar to recover after Friday

The wave pattern of the 4-hour chart for the euro/dollar remains somewhat unconventional but understandable. The upward trend, initiated on March 15, might develop into a more complex structure. However, at this point, I'm expecting a downward trend to form, which will likely have three waves. I've consistently mentioned my anticipation for the pair to approach the 5th figure, where the formation of the upward three-wave pattern began. I still stand by this view. The assumed wave b has concluded, as suggested by the subsequent retraction of the quotes from the reached peaks.

Considering recent developments, particularly the movement of the GBP/USD pair, there's an alternative wave pattern suggesting the entire trend segment from March 15 to April 26 represents one wave a. If this is the case, the formation of an upward wave c follows the next wave b. In this scenario, the wave patterns for the GBP and EUR match, aligning things. If this hypothesis is true, we can expect the euro to continue rising from its current position, possibly reaching and exceeding the 11th figure.

The market was notably disappointed by the payroll figures

The euro/dollar exchange rate rose by 80 basis points on Friday and stayed virtually unchanged on Monday. The pair has nearly returned to the peak of the presumed wave b. However, it's worth noting that the latest movements could transform into a wave c, potentially leading to a further increase. As the peak of wave b has not been surpassed yet, there remains a possibility for the decline of the euro to resume.

Monday could have been more uneventful in terms of economic news. Neither the European Union nor the USA released any economic reports throughout the day, which could account for the relatively low volatility and lack of market direction. However, on Friday, the market significantly recoiled upon learning that June's payroll numbers fell short of expectations. Despite a drop in unemployment to 3.6% and a satisfactory ADP report showing nearly 0.5 million new jobs, the American currency couldn't recover, even in the face of other positive data released on Thursday and Friday.

The demand for the dollar plunged significantly. While we could have witnessed a downturn today, it didn't happen, bolstering my belief that we're within wave c. The weak Nonfarm Payrolls came at a very inconvenient time. The market disregards the potential for two more Fed rate hikes this year, instead focusing on America's disappointing statistical data.

General Conclusions.

Based on the analysis conducted, the formation of a downward trend segment continues. The pair has a rather large scope for a decrease. I still consider targets in the area of 1.0500–1.0600 quite realistic, and with these targets, I advise selling the pair based on the downward signals of the MACD indicator. The presumed wave b is completed. According to an alternative analysis, the ascending wave will be longer and more complex, and this scenario will become the main one in the event of a successful attempt to break through the current peak of wave b.

On a larger wave scale, the wave analysis of the upward trend segment has taken on an extended form but is likely completed. We saw five waves up, which most likely formed an a-b-c-d-e structure. Then the pair built two three-wave structures: down and up. It is likely in the process of constructing another downward three-wave structure.