Wave analysis indicates continued growth for EURUSD

EURUSD is consolidating near the 1.0620 level on Wednesday after rising 1.4% in the previous session. These gains came after Germany's conservatives and social democrats reached an agreement on debt reform. As part of the reform, a 500 billion euro fund will be created to finance infrastructure projects. In addition, a revision of borrowing rules to increase defense spending is being discussed.

Additional support for the euro came from a weakening of the U.S. dollar following comments by U.S. Commerce Secretary Howard Lutnick on the possible reduction of tariffs on Canadian and Mexican goods, which were introduced the day before. The official told Fox News that a review of the tariffs is already under discussion and could be decided on Wednesday.

Looking ahead to this week, there are some important macroeconomic data releases that could affect the EURUSD's momentum. On Wednesday, the ADP Employment Report will be released — the forecast is 140 thousand versus the previous 183 thousand. On Thursday, the European Central Bank (ECB) will make a decision on its monetary policy. The bank is expected to lower the key interest rate from 2.9% to 2.65% and the deposit rate from 2.75% to 2.5%. The regulator is trying to mitigate the effects of a slowdown in the Eurozone economy and minimize the risk of a recession.

The key event of the week will be Friday's U.S. Nonfarm payrolls report. Its results may influence the market's expectations regarding the country's monetary policy, and thus determine the future movement of the currency pair.

From a technical point of view, the EURUSD rate has formed an upward potential after breaking out of the downtrend on the daily chart (D1). The wave structure on the H6 time frame indicates the movement in the third upward wave. The breakout of the top of the first wave at 1.0530 has strengthened the upward momentum. The Bull and Bear Power indicators (default parameters) are above zero, confirming the dominance of the bullish sentiment.

Signal:

Short-term prospects for EURUSD suggest buying. 

The target is at the level of 1.0940.

Part of the profit should be taken near the level of 1.0770.

A stop-loss could be placed at the level of 1.0360.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.