Wave analysis of EUR/USD for June 17. Fed meeting triggered an increase in demand for US dollar


The wave counting of the 4-hour chart for the Euro/Dollar instrument has become more complicated after the results of the Fed meeting were summed up. The meeting itself will be discussed a little later, but for now, I want to note that within just one hour, the instrument's quotes fell by 123 basis points, and today they lost another 66 during the day. Thus, the proposed wave 4, which raised many questions because of its complex internal wave structure, is recognized as untenable. Therefore, it has now transformed into wave a of the supposed new downward trend, which may also turn out to be three-wave. In this case, the internal wave structure of this wave a also raises certain questions, since more than 5 waves are already visible inside it. However, complex corrective structures can consist of a large number of waves, and the very complexity of the wave counting just indicates that the wave is corrective, not impulsive. Thus, I expect in the near future the completion of the construction of this wave and the departure of quotes from the lows reached within wave b. An unsuccessful attempt to break through the 61.8% Fibonacci level may indicate that the markets are ready to buy the euro.

The news background on Thursday was very weak until the results of the Fed meeting were summed up in the evening. I cannot say that the FOMC has made any important decisions. The rate remained at the same level. The program of assistance to the economy, too. More important, however, was what the Fed said in an accompanying statement and what Jerome Powell said at a press conference. According to the Fed's position, the economy continues to recover at a high rate but still needs monetary support. Therefore, the timing of the completion of the stimulus program is not yet known - the Fed wants to achieve the labor market entry to the levels of maximum employment. With regard to inflation, the following was said: the consumer price index has grown strongly recently, but mainly due to the influence of temporary factors. That is, the Fed expects inflation to slow down in the future. But the forecasts for GDP for 2021 were raised, now the US Central Bank expects economic growth by 7%. The forecast for unemployment was also downgraded and the forecast for inflation for the coming years was raised (slightly). It also became known that already seven committee members are in favor of a rate hike in 2022, and Jerome Powell said at a press conference that in the near future, the regulator will begin discussing the completion of the program to support the US economy. All of these can be called "hawkish" factors, so the demand for the US dollar rose yesterday quite justifiably.

Based on the analysis, I still expect the instrument quotes to go up, but now within the corrective wave b. It is necessary to wait for the signal of the completion of wave a, it may be an unsuccessful attempt to break through the 1.1918 mark, which equates to 61.8% according to Fibonacci. Purchases of the European currency can be carried out with targets located around the levels of 1.2050 and 1.2132, which corresponds to 38.2% and 23.6% Fibonacci for each MACD signal "up".


The wave counting of the new upward trend section is not entirely unambiguous, however, at this time, it is presumably completed. Thus, now I am expecting the formation of three downward waves, the first wave may already be nearing its completion.

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