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20.05.202401:03 Forex Analysis & Reviews: What to expect for the dollar next week?

Exchange Rates 20.05.2024 analysis

The US news background, as always, caught the attention of the market. The US dollar is in a terrible state, declining for over a month against the euro and the pound. The greenback should start strengthening soon, as it might be too late otherwise. Any further delay could alter the wave pattern of both instruments, leading to unknown consequences. What news background awaits us?

The US will be relatively quiet. We have the "Federal Reserve minutes," business activity indices, jobless claims, durable goods orders, and the consumer sentiment index from the University of Michigan. It might seem like a sufficient number of important reports, but the market does not perceive them seriously enough to provide significant support to the dollar. Moreover, if the reports don't turn out to be very strong, the market will have more reasons to decrease demand for the dollar. Such a situation is perilous for the US currency.

Exchange Rates 20.05.2024 analysis

Honestly, it's quite difficult for me to say what might save the US dollar in a situation where it has several strong reasons to appreciate, but it doesn't. If the market is not paying attention to the dollar, no news background can provide help. Undoubtedly, all of the upcoming macro data need to be at very high levels, but even that might not save the US currency from falling, which would contradict the wave pattern. However, the wave pattern can change.

Based on everything mentioned above, we have 1.0880 as an important level for the euro, as well as a series of reports from the US, the Eurozone, and the UK. All these reports should support the sellers, and only then can we expect the corrective waves to end and both instruments to resume the decline. We can also hope for a miracle in the form of buyer saturation or increased seller activity, which, as I mentioned, has been very passive for over a month.

Wave analysis for EUR/USD:

Based on the conducted analysis of EUR/USD, I conclude that a bearish wave set is being formed. In the near future, I expect an impulsive downward wave 3 in 3 or c to form with a significant decline in the instrument. I am considering short positions with targets near the 1.0462 mark. An unsuccessful attempt to break through the 1.0880 mark, which corresponds to 61.8% by Fibonacci, may indicate that the market is ready to sell.

Exchange Rates 20.05.2024 analysis

Wave analysis for GBP/USD:

The wave pattern of the GBP/USD instrument suggests a decline. I am considering selling the instrument with targets below the 1.2039 level, because I believe that wave 3 or c is being formed. A successful attempt to break 1.2625, which corresponds to 38.2% Fibonacci from above, will indicate the completion of an internal, corrective wave 3 or c, which looks like a classic three-wave pattern right now.

Key principles of my analysis:

Wave structures should be simple and understandable. Complex structures are difficult to work with, and they often bring changes.

If you are not confident about the market's movement, it would be better not to enter it.

We cannot guarantee the direction of movement. Don't forget about Stop Loss orders.

Wave analysis can be combined with other types of analysis and trading strategies.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

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