empty
03.01.2023 09:03 AM
EUR/USD wave analysis on January 3, 2023. EUR awaits data on German inflation

This image is no longer relevant

The EUR/USD wave layout on the 4-hour chart looks rather clear. The entire ascending section of the trend has a complex structure. It has taken a clearly corrective and extended form. So, we have a complex corrective wave pattern consisting of a-b-c-d-e parts where wave e has a more complex structure than the previous four waves. If the current wave setup is correct, then this structure may be nearing its completion or has already been completed as the peak of the wave e is much higher than the peak of the wave c. If so, we can expect the formation of at least three descending waves. I anticipate a strong decline in the pair although it may start a bit later due to slow market activity after the winter holidays. A failed attempt to break through the 1.0726 level, which corresponds to the 200.0% Fibonacci level, indicates that the market is ready to turn bearish on the pair. However, demand for the US dollar hasn't increased yet despite all the favorable factors. The internal structure of the wave e looks very unclear as we can hardly identify any sub-waves within it.

Markets slowly back to work

On Monday, the euro/dollar pair dropped by 40 pips. In the last few days of 2022, the demand for the instrument increased slightly. Yet, the pair still failed to break through the 200.0% Fibonacci level. The high of wave e has not been broken yet. Therefore, we can say that this wave is complete. We have an excellent signal and a strong level of 1.0726 from where we can make trading decisions. A successful breakout of this level will indicate that the market is ready to buy the euro. This means that the entire ascending section of the trend will become even more extended. In a different scenario, the pair will decline and form at least a three-wave structure.

Today, Europe will publish the first important economic report at the start of the year. Usually, I don't take into consideration the data from Germany, Spain, or Italy as these are just the countries inside the eurozone. Therefore, the reaction of the market to the data from separate countries is usually weak or zero. However today, the pair is trading flat which means that market participants may appreciate such a report. In December, inflation in Germany is expected to have eased to 9.1% from 10%. If the forecast meets market expectations, it will indicate a considerable slowdown in consumer prices. I would like to remind you that Germany is a powerhouse of the EU which is why its inflation may decline faster than in other EU countries. At the same time, inflation in the eurozone (which is more crucial for the euro) may remain high due to slower progress in other block members. Therefore, the inflation rate in Germany cannot be used to evaluate the inflation in the eurozone.

This image is no longer relevant

Conclusion

Based on the analysis above, I can conclude that the ascending section of the trend has become more complex and took on a five-wave structure that is nearing its completion. With this in mind, I would recommend selling the pair with the targets located at 0.9994, which corresponds to the 323.6% Fibonacci level. It is also possible that the ascending section of the trend will get a more extended form. This scenario is very likely. At least, we have a relevant sell signal.

On higher time frames, the wave layout of the descending section of the trend is getting extended and more complex. We have identified five ascending waves that most likely make up the a-b-c-d-e pattern. The pair may start a downtrend as soon as this trend section is completed.

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

GBP/USD Analysis on June 9, 2025

For the GBP/USD pair, the wave pattern continues to indicate the formation of an upward impulse wave structure. The wave pattern closely resembles that of the EUR/USD pair. Until February

Chin Zhao 20:16 2025-06-09 UTC+2

EUR/USD Analysis on June 9, 2025

The wave structure on the 4-hour EUR/USD chart has shifted to an upward formation and continues to hold this structure. I believe there's little doubt that this transformation occurred solely

Chin Zhao 20:09 2025-06-09 UTC+2

Analysis of EUR/USD on June 5, 2025

The wave pattern on the 4-hour chart for the EUR/USD pair has transformed into an upward structure and continues to maintain this formation. I believe there is little doubt that

Chin Zhao 20:03 2025-06-05 UTC+2

GBP/USD Analysis on June 4, 2025

The wave pattern for GBP/USD continues to indicate the formation of an upward impulsive wave structure. The wave picture is almost identical to that of the EUR/USD pair. Until February

Chin Zhao 18:48 2025-06-04 UTC+2

EUR/USD Analysis on June 3, 2025

The wave pattern on the 4-hour chart for EUR/USD has transformed into an upward structure and remains such. I believe there's no doubt that this transformation occurred exclusively

Chin Zhao 19:38 2025-06-03 UTC+2

GBP/USD Analysis on June 3, 2025

The wave structure for GBP/USD continues to indicate the development of an upward impulsive wave pattern. The wave pattern is almost identical to that of the EUR/USD pair. Until February

Chin Zhao 19:32 2025-06-03 UTC+2

EUR/USD Analysis on June 2, 2025

The wave structure on the 4-hour chart for EUR/USD has transformed into a bullish formation and continues to hold that shape. I believe there is no doubt that this transformation

Chin Zhao 19:07 2025-06-02 UTC+2

GBP/USD Analysis on June 2, 2025

The wave structure for GBP/USD continues to indicate the formation of a bullish impulse wave pattern. The wave pattern closely mirrors that of EUR/USD. Until February 28, we observed

Chin Zhao 19:05 2025-06-02 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for GBP/USD, AUD/USD, USD/CHF, EUR/JPY, EUR/GBP, and the US Dollar Index on June 2nd

During the upcoming week, the British pound is expected to move from its current zone toward the calculated resistance area. In the early days, a downward vector with potential pressure

Isabel Clark 11:53 2025-06-02 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, NZD/USD, and Gold on June 2nd

In the coming days, the euro is expected to continue moving sideways. A short-term decline toward the support zone is possible. Afterward, conditions for a reversal may form. The start

Isabel Clark 11:48 2025-06-02 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.