28.01.2023 06:40 PM
EUR/USD. Analysis for January 28, 2023

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The euro/dollar instrument's 4-hour wave marking hasn't changed much recently and is still getting more intricate, and the entire upward component of the trend is still being stretched. It is overly intricate and has a prominent corrective (but its length is better suited for the pulse section). We have obtained the wave structure a-b-c-d-e, in which wave e has a much more complex form than the first four waves. Since the peak of wave e is substantially higher than the peak of wave C, if the wave markings are accurate, construction on this structure may be nearly finished. I'm still preparing for a decline in the instrument because we are predicted to build at least three waves down in this scenario. The demand for the euro currency increased in the first three weeks of 2023, and during this time the instrument only managed to move marginally lower from previously established levels. Failure to surpass the level of 1.0953, which corresponds to the Fibonacci ratio of 161.8%, will be interpreted as a sign that the market is prepared to lower demand for the instrument. Unfortunately, the development of the trend's correction part has been put off for the time being.

Quotes rarely deviate significantly from the highs that were reached.

On Friday, the euro/dollar instrument decreased by 25 basis points with a small amplitude. Even if the news was limited during the day, there was still some. In the European Union, Christine Lagarde gave a new speech that, in terms of content, wasn't all that different from her prior ones. Everything the ECB President said has already been heard numerous times. The market is currently anticipating the most "hawkish" moves from the European regulator because the ECB rate is much behind the Fed and Bank of England rates. I won't rule out the possibility that the ongoing increase in recent weeks in demand for the euro currency is a result of these expectations. Let me remind you that the market anticipates the Fed to halt rate increases after 25 basis points.

On Friday, it was revealed that personal incomes in America rose by 0.2% m/m while personal expenses fell by 0.2% m/m. These two numbers nearly matched what the market anticipated. Additionally issued were the consumer sentiment index from the University of Michigan and the basic price index of personal consumption expenditures. But you must focus on these indicators' names. Can we anticipate a significant market response from them? So I doubt it. I want to remind you that every nation has a vast array of economic indicators, but we are only concerned with the most significant ones that have the potential to influence market sentiment. Of course, Friday's data lacked this aptitude. Additionally, Thursday's numbers had little impact on market sentiment because there were far more significant and compelling reports. The United States' fourth-quarter GDP expanded by 2.9%, and orders for durable goods rose by 5.6%. After all of this data, the demand for the US dollar only formally grew.

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Conclusions in general

I conclude that the upward trend section's building is about finished based on the analysis. As a result, given that the MACD is signaling "down," it is now possible to contemplate sales with goals close to the predicted mark of 1.0350, or 261.8% per Fibonacci. The potential for complicating and extending the upward portion of the trend remains quite strong, as does the likelihood of this happening. The market will be ready to finish the wave e when a bid to break through the level of 1.0950 fails.

The wave marking of the descending trend segment notably becomes more intricate and lengthens at the higher wave scale. The a-b-c-d-e structure is most likely represented by the five upward waves we observed. After the construction of this portion is complete, work on a downward trend segment can start.

Chin Zhao,
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