EURUSD has recovered toward the 1.11 handle. Ahead of the FOMC, the analysis below includes EURUSD Elliott wave analysis.
December 11, 2019 | AtoZ Markets – On Friday, the US jobs came better than the market expected. USD rallied as a result and the Euro-dollar currency pair quickly tanked. Prior to the fall, the price met huge resistance around the 1.11 handle. The dip that followed eventually hit 1.104. However, this week followed with significant recoveries toward 1.11. If the resistance zone holds this time around, the long-term bearish trend will then be expected to continue toward 1.088 and below. Price activities on Wednesday have been mixed so far – a rally to 1.1095 follows a dip to the 1.1070 intraday support level. The market should be quiet from this moment until after today’s Fed decisions are known.
Key fundamental events this week
The two dominating events this week are the British parliamentary elections and the FOMC meeting before the December 15 US-China tariffs deadlines. The market expects the Fed to hold on to the current rates at its final monetary policy meeting of the year on Wednesday. Economists predicted that the Fed will maintain its current fund target rate after the country announced good Job numbers on Friday. After today’s FED decision, the market will then focus on the December 15 US-China trade tariffs headlines. Although there have been optimistic comments from the two parties in the last week, nothing is concrete yet. However, if a phase one deal is successful or the tariffs plans are extended, the market ‘risk-on’ mood will resume. Meanwhile, EURUSD still lies within the bearish territory.
EURUSD Elliott wave analysis
Technically, the odds still favour the bears especially if the Fed sounds hawkish. The long term bearish trend might continue if the price breaks below the current bullish corrective channel. However, if the Fed sounds overly dovish, a huge break far above 1.11 could see the bullish correction from 1.099 continue higher to test 1.1180 resistance level. In the last update, we used the chart below and discussed the importance of the resistance zone at 1.11-1.1115 (Charting tools from TradingView)
A big breakdown below 1.107 quickly happened after the good Job data on Friday. However, the EURUSD price has now corrected deep toward 1.11. However, In as much as the 1.11-1.1115 zone still holds, the bears should be back in control. The chart below shows the new update.
A break below the rising channel and eventually 1.1040, should resume the long-term bearish trend toward 1.075.