FX.co ★ Analysis for EUR/USD pair on April 18th. Dull ending to a dull week

The wave analysis of the 4-hour chart for the EUR/USD pair remains unchanged. At the moment, we observe the construction of the presumed wave 3 within wave 3 or C from the downward trend section. If this is indeed the case, the decline in quotes will continue for quite some time, as the first wave of this section completed its formation around the 1.0450 mark. Therefore, the third wave of this trend section should end below it.

The market slowly reduces demand for the euro, although the news background fully supports the US dollar. An unsuccessful attempt to break through the 1.0955 mark, which equates to 61.8% according to Fibonacci, indicated the completion of the formation of wave 2 within wave 3 or C. Therefore, there is potential for a decline in the pair, and it is significant.

Is there a probability of a different wave analysis? There is always one. However, if since October 3rd of last year, we have observed a new upward trend section, then the last downward wave does not fit into any structure, which cannot be. Therefore, an upward section is possible only with a significant complication of wave analysis.

The EUR/USD pair rate did not change on Thursday but increased by 50 basis points the day before. These 50 points of growth were separate from the information background. There was absolutely nothing noteworthy among yesterday's important events. Even the inflation report in the European Union, which could have attracted the attention of my readers, turned out to be banal. However, inflation reports in the EU always come in two estimates, and the second one is practically never different from the first. Therefore, the second one is always a formality, and the market reacts to the first.

Therefore, there were no important news releases yesterday. There weren't any today either, as throughout the entire current week. The most important event could be considered the speech of Federal Reserve Chairman Jerome Powell, but it went unnoticed. Over the past months, I have regularly stated that the FOMC will only lower rates once inflation approaches the target level. Powell's new speech only confirmed my assumption.

It is also logical to assume that the longer the Fed delays the first policy easing, the stronger the demand for the dollar should be. However, demand is growing slowly, and the market needs to play out more bearish factors. Everything is going according to plan, and the euro will reach its targets, which are located below the 1.0450 mark. The euro and the dollar are the two most common currencies in the world, so volatility in the EUR/USD pair has always been low - too many market participants require a lot of effort to move the pair.

General Conclusions

Based on the EUR/USD analysis, the construction of a downward set of waves continues. Waves 2 or b and 2 within wave 3 or C are completed, so in the near future, I expect the continuation of the construction of a significant downward impulsive wave 3 within wave 3 or C. I consider sales with targets near the calculated mark of 1.0463, as the news background favors the dollar. The necessary signal for sale near the 1.0880 mark was formed (an unsuccessful breakout attempt).

On a larger wave scale, it can be seen that the presumed wave 2 or b, which in length exceeded 61.8% according to Fibonacci from the first wave, may be completed. If this is the case, the scenario with the construction of wave 3 or C and a decline in the pair below the 4-figure mark has begun to unfold.

The main principles of my analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to play out and often change.
2. If there is confidence in what is happening in the market, it is better to avoid entering it.
3. There is never 100% certainty about the direction of movement. Remember about Stop Loss protective orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.