07.03.2023 06:06 PM
EUR/USD. Analysis for March 7, 2023

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The wave pattern on the 4-hour chart for the euro/dollar pair hasn't changed at all recently, which is excellent because it means we know how things could alter. 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 patterns are accurate, then this structure's development is complete, and wave e was far longer than any other wave. I still anticipate a new, substantial decline of the pair because we are predicted to build at least three waves down. A few days or weeks of inactivity are 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 background news 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.

With an empty calendar, demand for the US dollar is increasing. The euro/dollar pair dropped by 30 basis points on Tuesday, but the amplitude hasn't changed much since yesterday, making price movements of 30 to 40 points hardly noteworthy to infer the wave markup. This allows me to conclude that no changes are currently occurring. The pair has made two unsuccessful attempts to break through the 23.6% Fibonacci level at once, suggesting that Wave B may have already been completed. As a result, demand for the euro currency may start to drop once more while growing for the US currency. By the way, Fed President Jerome Powell will give a speech today in a few hours. The next one is tomorrow. According to many analysts and economists, the market is already anticipating him to intensify the "hawkish" rhetoric. Everyone agrees that the FOMC has the potential to surprise the markets this month. The US economy is performing well; the labor market is strong; there is minimal unemployment; and inflation has started to decline more gradually than it did previously. Isn't this the ideal basis for a new acceleration of the recovery or perhaps an extension of the rate of an interest rate increase?

Perhaps Powell will stick to his earlier rhetoric in the evening and prefer to wait for the Fed meeting to reveal changes in the approach to monetary policy. But, if the market is already anticipating a rise in "hawkish" rhetoric, this could increase demand for US dollars. This scenario perfectly fits the existing wave configuration, which presupposes the development of at least one more downward wave. The ECB is also attempting to stay up with the Fed, but it is hopelessly falling behind its "friend" in the United States. Although wave b has not yet appeared to be very convincing, I think the pair may now start to descend again.

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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 constructed 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 upward 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 negative portion of the trend is already taking shape and can have any form or extent. Conclusions in general.

Chin Zhao,
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