EURUSD spiked to 1.134 on Wednesday shortly after the US inflation data report. However, price could not sustain the swift rally.
June 12, 2019 | AtoZ Markets – After peaking close to 1.135 last week, the bulls have failed to build on the momentum that caused 250 pips rally from 1.11. The immediate short-term trend is bullish but the overwhelming long-term trend is still bearish. It remains to be seen whether the current bullish run is just a minor bounce in the bearish trend or the bulls mean business.
US inflation data came weaker than expected. The Dollar quickly reacted negatively to the news release and the EURUSD spiked to 1.134. However, the swift rally didn’t last as subsequent moves dragged it back to prices slightly above 1.13 after the Dollar recovered.
On Wednesday, the ECB president Draghi delivered opening remarks at the ECB conference in Frankfurt. He discussed the challenges that global trade is facing in recent years and how that has affected the bloc’s currency. There is not much coming from the EU economic calendar in the coming days. The market looks cautious, awaiting the next Fomc meeting next week. US inflation data will also be released on Friday.
EURUSD Elliott wave analysis and important price levels
EURUSD price broke above 1.13 but is still getting attracted to it. 1.1265 is the next support level which could be revisited after last week’s break above it. Below 1.165 is 1.11 if the bearish trend resumes. If the current short-term bullish trend continues, price should hit 1.145, 1.15 and 1.157 resistance levels. These levels especially 1.15 are very significant.
From the Elliott wave perspective, the outlook is mixed. The bearish impulse wave that started in January 2018 might have completed at 1.11 but the 5th wave reversal pattern was not properly formed. In the last update, we had two scenarios. To accept that the long term bullish correction has started, price is expected to breakaway to 1.14 with an impulse wave as the chart below used for the first scenario in the last update shows.
Price has barely changed from this update. A break above 1.1348 is required. On the other hand, the chart below shows there is still a strong possibility for downside moves.
A break below the blue trendline could definitely lead to further dips to complete the 5th wave of the long term bearish trend around 1.1050.