EURUSD bearish trend resumes as the price slumps toward the 1.099 intraday low. The following also includes technical analysis based on the Elliott wave theory.
November 25, 2019 | AtoZ Markets – The Euro-dollar currency pair was one of the most volatile in the latter part of the last week. The currency pair slumped after it met a strong rejection below 1.11. The rally from 1.099, therefore, was truncated and now seems the overwhelming bias is bearish. After a shallow minor recovery to 1.1035 in the Asian session, the selling pressure has overtaken the market again in the European session. We should see this continue to the 1.099 level in the meantime and even breach it toward 1.088.
EURUSD bearish trend resumes after the German IFO reports
After publishing its November report, the IFO concluded that ‘Germany manufacturing is still stuck in recession’. The German IFO business climate report came at 95 just as the market expected. However, the negative comment has further set the pair back from recoveries. The long term bearish trend from 1.255 started in February 2018. The bearish trend since 2018 has been fueled by the economic instabilities in the EU’s largest economies, the Brexit concerns and the trade conflict between the US and China. Therefore, EURUSD price has persistently stayed downside amid some bounces.
However, the US and China are now close to agreeing on phase one of the trade deal. Reports from Washington and Beijing have shown that the two parties are willing to strike the first phase of the trade deal. China’s pledge to penalize Intellectual thefts which has been a major stumbling block in negotiations has also boosted investors’ confidence. The USD should drop and if economic events from the Euro-zone show improvement, we should see the pair returning upside. However, as we have seen in recent times, the market mood changes swiftly. Although the stock markets have been responding on a brighter note, EURUSD is holding above 1.1 and still looking bearish. This shows that doubts still exists.
EURUSD Elliott wave analysis
Technically, EURUSD seems to have returned to the downside. If the current bearish run pushes below 1.099, we will most likely see a test of the 1.088 low. In the previous updates, we identified an ending diagonal 5th wave emerging as the chart below shows (All the charting tools used below are from TradingView).
Unless a break above 1.118 happens, the bears still have the upper hand. Wave (v) is still emerging and should test 1.088 before the next recovery. In the last update, we had two scenarios as the chart below shows.
The price broke below 1.053 as the new chart below shows, to trigger the bearish scenario after completing a head and shoulder pattern at the resistance zone.
We will most likely see a bearish impulse wave from 1.109 to prices below 1.088. Of course, intraday moves will depend on the market mood triggered by the highlights from the US-China trade talk and the Euro-zone economic conditions.