On a large scale, the wave structure of the EUR/USD has almost completed its formation. The pullback from the recent highs may indicate that the construction of wave 3 or C is almost fully completed. If this assumption is correct, then the quotes will continue to move down to the targets located below the lowest point of 4 in 5 in 3 wave or C wave within the formation of the expected wave 4. When the formation of the wave 4 is completed, the price will resume the upward trend within the wave 5. It is also possible that the entire trend structure, which started to form in March, will take a three-wave pattern and will complete its formation around the level of 1.2011.

On a smaller scale, the structure of the wave 4 in 5 in 3 or C has extended more than expected, while the wave 5 in 5 in 3 or C has already finished its formation. Thus, the price is now declining within the expected wave 4 of the uptrend. If this is so, the wave should take on a clear three-wave form since all the previous waves were quite extended.

Friday, September 4, was full of economic news. Today, traders were waiting for the US jobs report on unemployment rate and the Nonfarm payrolls in the US. Usually, the unemployment report can hardly overshadow the Nonfarm payrolls data. However, it was different this time. The number of new jobs came in at 1 million 371 thousand, which is 29 thousand below market expectations. This is not a striking difference, but anyway. At the same time, the unemployment rate turned out to be much better than forecasted and amounted to 8.4% in August instead of the projected 9.8% and 10.2% in July. This is certainly great news for both the US and its currency as it raises hopes for a faster economic recovery. In addition, the average wage rose by 0.4% in August, although the markets did not expect any improvements there. In general, all macroeconomic data from the US turned out to be quite strong and supported the demand for the US dollar which continued to rise in the afternoon. However, the dollar's rally from September 1 may be short-lived. According to the wave structure, the US currency is unlikely to rise sharply and may just undergo a slight upward correction within the wave. Besides, the overall background is also far from positive since the US economy contracted the most in the second quarter. In addition, the coronavirus pandemic is still weighing on the US. In the meantime, the country is getting ready for elections, and the ruling parties continue to compete for power. Also, the future of the trade deal between China and the US is completely uncertain. There have been speculations that Beijing is going to withdraw from the trade agreement. The phase 2 of the trade agreement is not even discussed.

Conclusion and recommendations:

The euro/dollar pair has most likely completed the formation of the wave 3 or C. Therefore, I recommend opening short positions on the instrument with the targets located near the estimated level of 1.1571. This level corresponds to 200.0% Fibonacci for each downward signal on MACD. If the wave 4 is being formed at the moment, then it may take a three-wave form.