The wave structure of the euro/dollar pair on the four-hour chart is still looking convincing. Wave d turned out to be longer than I expected. However, this does not change the key idea of the wave structure. I still believe that this wave is correctional and not an impulse one. Its internal wave structure proves this fact. Consequently, it cannot be wave 1 of a new upward section of the trend.

If it is true, the quotes should resume falling within wave e in C. In the near future, the quotes may slide to the low of wave c in C. A successful break of this level may prove the current wave structure. A real break of the level of 1.1315 will point to the fact that traders may resume selling off the euro.

On Wednesday, the euro/dollar pair dropped by 30-40 pips. The market conditions are still more favorable for the US dollar that has been gaining in value for 9 days already.

Demand for the US dollar is rising slowly, but confidently. No one could predict market reaction to the Fed's meeting results. There are a lot of predictions and opinions about the near future. According to the main scenario, the Fed will raise the key interest rate 4 times in 2022: in March, June, November, and December.

However, some analysts suppose that there will be more hikes. Large commerce and investment banks, including Deutsche Bank, also support the idea. It is quite possible that market participants underestimate the hawkish stance of the Fed. However, the situation will clear up only after the meeting.

It is quite possible that the Fed will raise the key interest rate during the meeting. However, according to the market, the likelihood is just 5%. Nevertheless, we cannot exclude such a scenario. We all remember that in December, the Bank of England unexpectedly raised the benchmark rate. Notably, the Fed may take some steps concerning the QE program.

During the press conference, Jerome Powell is likely to remain cautious. He will hardly openly announce that the key interest rate will be raised in March. However, he may provide new comments about inflation that is still surging. In the worst-case scenario, the regulator will announce a higher pace of the QE tapering. In the best-case scenario, the benchmark rate will be hiked by 25 basis points. The meeting results will shape the currencies' dynamic.

Conclusion

Judging by the analysis, I can say that the formation of the ascending wave d is completed. If this assumption is correct, it is necessary to sell the instrument with targets located near 1.1154, which is equivalent to 127.2% Fibonacci. So far, there is no reason to expect the alternative scenario, which would involve a strong increase in the instrument. Only a small correctional wave may occur within wave a in C.