EURUSD hits its highest in 32 months, leveraging on a plummeting dollar. The following 17 December EURUSD Elliott wave analysis shares some insights.
December 17, 2020 / AtoZ Markets – The Euro-dollar trades above the 1.22 psychology level as the major fundamental factors drive the dollar to the bottom of the chart. The buck loses more ground against its major peers. With just two weeks left in the year, this currency pair is at a touching distance of the major resistance level at 1.255. Since November, EURUSD is up 5.6%. The positive global risk developments pressured the safe-havens especially the Dollar.
November started with a President Biden’s win which was anti-dollar at the time. The news of vaccines later came. Vaccine distributions started in December – negative again for the dollar. Last week, the market was concerned that a stimulus will not happen this week. The news lifted the mood around the greenback. However, the political powers are back on the table to force a fiscal stimulus package before the week ends – pressure on USD.
The market felt the ECB was to jawbone the Euro last week. However, the bank declared a much lower than expected QE package – positive for EUR. Also, this week, the Eurozone PMIs came very much better than expected – positive for EUR again. The FOMC on Wednesday left rates unchanged as expected and vowed to continue its asset-buying program – negative for USD. Over the weekend, the US FDA approved Covid-19 vaccines and distribution to start in November. The vaccines roll out already commenced in the UK. Canada to start in December as well. The rest of the Euro-zone? Perhaps in January. With all these, the demand for the safe-haven dollar is at the lowest since the start of the pandemic.
Looking forward, risk appetite will dominate the rest of the year. Joe Biden is officially the President-Elect which means the ‘Donald Trump risk’ is almost off the table. Stimulus is believed to be able to sustain the market until the virus is finally dominated, hopefully, by the vaccines. Therefore, EURUSD will most likely remain bullish.
7 December EURUSD Elliott wave analysis
The 17 December EURUSD Elliott wave analysis above shows a bullish impulse wave rally since March. The pattern is in the last stage – the 5th wave. However, the 5th wave is not yet over. We might therefore see further rallies to complete the 5th wave at least at 1.245 (the 61.8% Fibonacci projection of wave 1-3 from 4). The level is just about 100 pips away from the 1.255 high. This means that traders should watch for the 1.245-1.255 resistance zone. According to the Elliott wave theory, after an impulse wave pattern of this manner, a 3-wave correction should happen in the opposite direction. The best price zone so far to anticipate the start of the bearish correction is at the zone mentioned above. Thus, more bullish traction can happen toward the zone.