EURUSD is trading steadily above 1.11 after bouncing off the critical level last week. Ahead of key economic events coming later this week, the following share technical insights based on the Elliott wave theory.
July 29, 2019 | AtoZ Markets - Last week was the ECB week. The unchanged ECB rates decision saw the Euro-dollar dropped but the bank's clear-cut outlook to float the currency above the tide stabilized it. The bearish trend, therefore, paused and the price went sideways awaiting the next trigger. This week, the market will most likely be volatile with the FED meeting in the mid-week and the US employment data on Friday.
Meanwhile, the week started quietly with price oscillating between 1.113 and 1.112. The nearest resistance and support levels are at 1.118 and 1.11 respectively. Before the big events, price should attempt to hit or break away from any of the intraday extremes. Above 1.118, we might see a surge into the 1.118-1.1285 territory. On the other hand, the broader bearish trend could continue below the 1.11 handle into the mid or lower region of 1.10s. Below 1.11, there is a technical diagonal support zone at 1.105-1.1025.
EURUSD analysis: fundamental events to watch out for
Last week, the US Advanced GDP report was upbeat. At 2.1% in Q2, the data came better than expected. Meanwhile, the Fed's FOMC meeting on Wednesday is expected to end with rates cut. However, this move might not lead to further easing and might just be priced in. More important is what happens during the press conference which will take place after the rates announcement. The US Non-farm payroll will follow on Friday. The market expects 160k additional jobs in the past month, down from the 224k recorded in the previous month. In addition, the average hourly earnings are expected to increase by 0.2% and the unemployment rate to remain at 3.7%.
EURUSD Elliott wave analysis
Price is in the last stage of a bearish impulse wave that started in January 2018. The 5th wave is completing an ending diagonal pattern which, according to the last update, is expected to end around 1.105-1.1025 before the long term bullish correction starts. The chart below shows how close price is to completing this wave structure.
Price should drop further to 1.105 where we would watch for bullish reversal patterns. A break above the wave c of (v) falling channel would be the ideal confirmation for a long term bullish correction toward 1.18-1.2. A fast dip below 1.1 would invalidate this scenario and set the EURUSD price further downside.