The European currency will start the new month as the underdog. The decline of the euro has continued for more than a month. Although this section of the trend is not impulsive, it does not change the essence of the matter—the demand for the single European currency is falling amid somewhat contradictory news. Most of the truly significant events of October have not been taken seriously by the market. As evidence, there is no need to provide a long list of economic reports or global events. One thing worth mentioning: the dollar has been rising throughout the month, even as the "shutdown" continues in the US. How many predicted the strengthening of the American currency during a "shutdown"? Personally, I remember that at the beginning of last month, many economists were saying "a maximum of 2 weeks." Thus, it is not so much the demand for euros that is decreasing, but rather the demand for dollars that is growing.
Therefore, in the coming week, it will be essential to understand how the market plans to act. If it aligns with the last 4-5 weeks, the news background might not warrant any attention. What's the point when the dollar strengthens against all odds, regardless of practically any data? The end of the European Central Bank's monetary policy easing cycle does not matter to market participants. The resumption of the Fed's monetary policy easing cycle is irrelevant. New tariffs and threats from Donald Trump are not taken seriously by traders.
What should my readers pay attention to? The speech of Christine Lagarde, who has been speaking every two days for the past month, and the week provided exhaustive answers to the questions "How does the ECB plan to act in the near future?" and "Is there a need to adjust interest rates?" To the secondary reports on industrial production in Germany and retail sales in the EU, although there were many more important data releases in the European Union.
The wave analysis does not provide clarity either. We have seen two clear three-wave structures, after which a new correctional structure began, but now in 5 waves. This means that the initial three-wave structure has become more complicated. The current five-wave structure may also become more complex. Wave analyses should always be simple and understandable to trade effectively. Currently, the wave analysis is complicated, and the instrument's direction contradicts the news background.
Based on the analysis of EUR/USD, the instrument continues to build an upward section of the trend. Currently, the market is in a pause, but Donald Trump's policies and the Federal Reserve's stance remain significant factors in the future decline of the American currency. The targets for the current section of the trend may extend up to the 25 level. At this time, we can observe the development of corrective wave 4, which takes on a very complex and elongated appearance. Therefore, in the near future, I am still considering only purchases, as any downward structures have a corrective nature. The latest structure, a-b-c-d-e, may be nearing completion.
The wave pattern of the GBP/USD instrument has changed. We continue to deal with an upward, impulsive section of the trend, but its internal wave structure is becoming more complex. Wave 4 takes on a three-wave appearance, and its structure is significantly more elongated than wave 2. Another downward corrective structure is close to completion. I continue to expect the main wave structure to resume its development, with initial targets around the 38 and 40 levels, and I believe this could occur as early as the beginning of November.
