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28.02.2023 05:10 PM
EUR/USD. Analysis for February 28. Inflation in Europe is starting to accelerate again.

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The 4-hour chart for the euro/dollar pair still shows the same wave pattern, which is excellent because it allows us to predict how the situation will develop. Although its amplitude would be more appropriate for the impulsive section, the upward section of the trend has been corrected. The wave pattern a-b-c-d-e that we were able to obtain features a wave e that is far more complex than the other waves. If the wave analysis is accurate, then this pattern's development is complete, and wave e was far longer than any other wave. I still anticipate a significant decrease in the pair because we are anticipated to develop at least three waves downward. A few days or weeks of inactivity is possible with the pair, though. The quotes' retreat from the low they attained on Monday points to the potential start of wave 2 or b. If this is the case, then any news background will result in a rise in quotes for a while. In any event, I anticipate a new, rather sharp decrease following the completion of this wave, as the pair must first create at least three waves downward before considering a potential new upward section.

On Tuesday, the euro/dollar pair increased by 30 basis points, but the day's amplitude was relatively low. The most interesting events this week will take place on Wednesday, Thursday, and Friday, and the market will have to be content with less essential data on the first two days of the week. But they may appear insignificant at first look. For example, inflation data for January were released today in Spain and France, and they grew rather than decreased, as many might have expected. Inflation in Germany has risen, as was previously reported. As a result, in January, the three largest economies in the European Union displayed a downward inflationary trend. Why does this matter? Only then will inflation begin to increase again across the European Union.

Germany's inflation for February will be revealed tomorrow, while the European Union's inflation for February will be released on Thursday. The market anticipates a drop in both indices, however, I'd like to point out the following. The consumer price index may slow down considerably more slowly than expected in the European Union, and since there was an increase in January, it generally has no significance in Germany. There won't be the anticipated overall reduction to 2% if inflation increases for one month and declines for the next. There is just another justification for the ECB to keep raising interest rates. And this factor might start to strengthen the demand for the euro once more. In the near future, inflation statistics in Europe must be actively monitored, as this element may return the pair to creating an upward trend segment while the wave pattern indicates the need to build a downward set of waves. There might be a disagreement.

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Conclusions in general

I draw the conclusion that the upward trend section's development is finished based on the analysis. As a result, it is now allowed to take into account sales with targets close to the predicted mark of 1.0284, or 50.0% Fibonacci. A correction wave 2 or b can be developed at this point, which should be considered. Opening sales now on the MACD "down" indications would be a good idea.

On the older wave scale, the ascending trend section's wave pattern has grown longer but is likely finished. The a-b-c-d-e pattern is most likely represented by the five upward waves we observed. The downward section of the trend is already taking shape and can have any form or extent.

Chin Zhao,
Analytical expert of InstaForex
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