2 December EURUSD Elliott wave analysis as dollar plummets

EURUSD hits highest price level in over 30 months. The following 2 December EURUSD Elliott wave analysis adds some technical insights.

December 2, 2020 / AtoZ Markets – The Euro gained more ground over the weakening dollar on Wednesday. The currency pair has now broken the September high to record its highest peak since April 2018. The greenback is weak across the board, surrendering to the bearish pressure after holding the ground for few weeks. The Fed shows signs of more stimulus package in December or January thus forcing flow from the save-haven dollar. The employment data on Friday will add more traction to the near-term direction of the pair. Meanwhile, Europe still remains on lockdown.

The dollar index remains the underlying driver for the major currency pairs. Traders will therefore continue to focus on what happens around the greenback. Starting from the negative side, there are concerns that the Covid-19 second wave in the US will get worse and falter the economy more than expected. Joe Biden in January might therefore tighten lockdown rules before vaccine distribution. There is the other side of stimulus hope which suggests economies will bounce back much faster than the second wave.  A $908 billion stimulus plan in December or January is being mentioned. Thus, USD has continued to struggle as the stock markets approach fresh all-time highs on higher risk appetite. In the Eurozone, strict lockdown is still in place in many of the countries in the bloc. The US’ reluctance to enforce stricter lockdown procedures suggests that the Euro-zone is more pro-active in this fight and perhaps ahead. The gives the EUR some advantage although more of the EURUSD rally has been as a result of a weak dollar across the board.

2 December EURUSD Elliott wave analysis

EURUSD has now gained over 13% since March. The bullish move is completing the 5th leg of an impulse wave move. The pattern started at 1.063 and found a corrective wave 4 base at 1.06 with a double bottom in early November. The break above the 1.2 psychological level is the final nail on the coffin for the expectant bears.

2 December EURUSD Elliott wave analysis

Chart from TradingView

As the 2 December EURUSD Elliott wave analysis chart above shows, wave 5 of (C) could hit as high as 1.2462 (61.8% Fibonacci extension of wave 1-3 from 4). We might see a dip to retest the 1.2 (now support) level before the next surge. Traders should also watch out for 1.2138-1.214 for short-term dip.

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