EURUSD Elliott wave analysis: Could the Euro pounce on Dollar weakness?

The Euro-dollar rallies back toward 1.174 after a quiet Asian session. The following looks at the October 5 EURUSD Elliott wave analysis ahead of Euro and US PMIs.

5 October, 2020 | AtoZ Markets - EURUSD surges toward 1.175 at the start of the European session. After last week's mixed US job data, the Euro looks set to bank on the dollar weakness. The Fed is looking likely to add to its QE program and thus put more pressure on the dollar. ECB on the other hand has so far maintained that the Euro strength is not out of its policy target. EURUSD, therefore, support further rallies and will most likely break above the 1.2 top in the coming weeks. However, we could see a slight decline to retest 1.168-1.166 before the bulls drive higher.

Last week, the US employment data came out mixed. While the NFP came disappointing, the unemployment rate fell better than expected. All these amid a shocking report that President Trump has contacted Covid-19. The markets are moving away from data and focusing more on geopolitics and the eventual actions or reactions of the central banks. However, the data are a pointer to what the banks could do. Meanwhile, the ECB President has downplayed fears of jawboning the Euro while the US legislature is putting together fresh rescue packages amid Covid-19 second wave. The FED Chair will speak later this week ahead of the FOMC on Wednesday. If the Fed pushes the Dollar down by enlarging its QE packages, the Euro-dollar is bound to go much higher. Traders will also watch for US PMI data on Monday and more talks from Lagarde at different events later in the week. Let's look at the EURUSD technical analysis.

EURUSD Elliott wave analysis October 5 - further rallies expected?

EURUSD Elliott wave analysis

Since March 20, EURUSD  has maintained a very bullish advantage over the dollar. A bullish impulse wave pattern from 1.0623 is very clear and sharp. From the chart above, it looks like the impulse wave has not yet ended. In September, the dollar rally forced the EURUSD 4th wave to 1.161. However, a good recovery has ensued in the last week of September to probably begin the 5th wave of this impulse wave rally. By projection, the Euro-dollar could surge above the 1.2 top to 1.25.

EURUSD Elliott wave analysis

Chart from TradingView

From the intraday perspective, EURUSD Elliott wave analysis shows the price of completing the 2nd sub-wave of wave (5). Although Monday started with a surge toward 1.175, until a break above 1.177 (wave 1 top) happens, wave 2 is expected to take a lower leg to 1.167-1.169. Wave 3 of (5) should be massive unless the current dip breaks below 1.16. Overall, the chances that the Euro-dollar would surge in the coming days and weeks is very high. From technical and fundamental perspectives, EURUSD should leverage on a highly probable USD weakness as US elections draw closer.

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