empty
21.08.2024 06:31 PM
Analysis for EUR/USD pair on August 21: FOMC Minutes and Revisions to Nonfarm Payrolls

This image is no longer relevant

The wave pattern on the 4-hour chart for EUR/USD is becoming increasingly complex. If we analyze the entire trend segment that began in September 2022, when the euro dropped to 0.9530, it appears that we are within an upward wave set. However, even within this segment, it is challenging to distinguish waves of a higher scale. In other words, there is no clear impulsive trend. We are witnessing a constant alternation of three- and five-wave corrective structures. Even now, the market hasn't managed to form a clear three-wave downward pattern from the peak reached in July of last year. First, there was a downward wave that covered the lows of previous waves, followed by a deep upward wave, and now, for seven months, the market has been forming something unclear.

Since January 2024, I can only identify two a-b-c three-wave structures with a reversal point on April 16. Therefore, the first thing to understand is that there is no trend at the moment. After the completion of the current wave c, a new three-wave downward pattern may begin to form. The trend segment from April 16 may take on a five-wave form, but it would still be corrective. Under such circumstances, I cannot believe in a prolonged rise of the euro, although it may continue for several more months.

The EUR/USD exchange rate remained unchanged on Wednesday, but "the day isn't over yet." Demand for the U.S. dollar has been decreasing for two consecutive weeks, with only a brief pause in this process last Thursday. This week, there has been no significant news background, but the market finds new reasons to sell the U.S. currency almost every day. Therefore, I wouldn't be surprised if the dollar depreciates further by the end of the day. Analysts attribute this decline in the U.S. currency to the anticipated Fed rate cuts, the threat of a recession in the U.S. economy, worsening labor market conditions, rising unemployment, and the possible victory of Donald Trump in the upcoming elections. I believe that economists are making concerted efforts to explain the continued decline of the dollar.

Today, the minutes of the July FOMC meeting will be released in the U.S., which could easily be used to further decrease demand for the dollar. No "dovish" decisions were made at the last meeting, but the FOMC is approaching the point of deciding on a rate cut. Consequently, almost any content in the minutes can be interpreted as "dovish." Over the past two weeks, the market has sold the dollar based on much more contradictory information. From a wave perspective, everything remains stable, and the construction of wave c continues.

Conclusions

Based on the analysis of EUR/USD, I conclude that the instrument continues to form a series of corrective structures. From the current position, the upward movement may continue within a five-wave corrective structure, and the scenario of forming a downward wave d has been temporarily canceled. The 1.1073 level couldn't even halt the instrument's growth for half an hour. Consequently, the upward movement may continue with targets around 1.1182, corresponding to the 161.8% Fibonacci level. The market continues to price in Fed rate cuts in September, November, December, and in 2025.

On a larger wave scale, it is also evident that the wave pattern is becoming more complex. It is likely that we are facing a new upward wave set, but its length and structure are difficult to predict at this time.

Key Principles of My Analysis:

  1. Wave structures should be simple and clear. Complex structures are difficult to trade and often undergo changes.
  2. If you are unsure of what is happening in the market, it's better to stay out of it.
  3. There is never 100% certainty in the direction of movement. Don't forget about protective Stop Loss orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.
Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD Analysis on April 17, 2025

The wave structure on the 4-hour EUR/USD chart has shifted into a bullish impulse formation. I believe there's no doubt this transformation occurred solely due to the new U.S. trade

Chin Zhao 19:12 2025-04-17 UTC+2

GBP/USD Analysis on April 17, 2025

The GBP/USD pair remained unchanged on Thursday. While such market behavior might have been expected for Thursday, it was surprising not to see a decline on Wednesday, given the number

Chin Zhao 19:09 2025-04-17 UTC+2

Analysis for EUR/USD on April 16, 2025

The wave structure on the 4-hour chart for the EUR/USD pair has shifted into a bullish formation. I think there's little doubt that this transformation was caused solely

Chin Zhao 18:56 2025-04-16 UTC+2

Analysis for GBP/USD on April 16, 2025

The wave structure of the GBP/USD pair has also transformed into a bullish, impulsive formation — "thanks" to Donald Trump. The wave pattern is almost identical to that of EUR/USD

Chin Zhao 18:53 2025-04-16 UTC+2

Analysis for EUR/USD on April 15, 2025

The wave structure on the 4-hour chart for EUR/USD has shifted into a bullish formation. I believe there's little doubt that this transformation is entirely due to the new U.S

Chin Zhao 19:03 2025-04-15 UTC+2

Analysis for GBP/USD on April 15, 2025

The wave structure for GBP/USD has also transformed into a bullish, impulsive formation — "thanks" to Donald Trump. The wave pattern is almost identical to that of EUR/USD. Until February

Chin Zhao 18:56 2025-04-15 UTC+2

Analysis for GBP/USD on April 14, 2025

The wave structure of the GBP/USD pair has also transitioned into a bullish, impulsive formation— thanks to Donald Trump. The wave pattern looks almost identical to that of EUR/USD

Chin Zhao 19:09 2025-04-14 UTC+2

Analysis for EUR/USD on April 14, 2025

The wave structure on the 4-hour chart for the EUR/USD pair has transitioned into a bullish formation. I believe there is little doubt that this shift occurred solely

Chin Zhao 19:05 2025-04-14 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for GBP/USD, AUD/USD, USD/CHF, EUR/JPY, AUD/JPY, and US Dollar Index – April 14th

GBP/USD Analysis: On the higher time frame of the pound sterling's major pair, a bullish trend has been forming since July last year. Over the past month, an extended corrective

Isabel Clark 12:20 2025-04-14 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, NZD/USD, and Gold – April 14th

EUR/USD Analysis: On the 4-hour chart of the euro major pair, an upward trend has been developing since early February. The structure of the wave has been forming its final

Isabel Clark 12:16 2025-04-14 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.