EURUSD trades a bit above 1.13. The market is upbeat despite the US-China trade war threats. The following share insights based on Elliott wave theory.
June 11, 2019 | AtoZ Markets – The Euro-dollar collapsed to 1.129 on Monday after last week’s big surge to 1.1347 following poor employment data from the U.S. Much of the post-NFP dip in EURUSD happened in the Asian session on Monday. Price recovered above 1.13 during the London and New York market sessions. The rally continued to 1.133 early in the London session on Tuesday. However, a slight dip to 1.1315 has followed and it looks very much likely that the dip from 1.1348 will continue toward 1.125 or slightly below.
It seems the Dollar will get back on its feet again sooner than expected as the market seems to ignore threats coming from President Trump. In his latest warning, he challenged his China counterpart Xi Jinping to meet him at the G20 summit coming at the end of the month or face new tariffs. While the Dollar could rise, the tension between Italy and the EU together with the uncertainty surrounding Brexit could pose more threat to the Euro. In its last meeting, the ECB has decided to keep rates unchanged till June 2020. The many conflicting fundamental outcomes since late 2019 have kept EURUSD trend very limited.
EURUSD Elliott wave analysis and important price levels
It still remains unclear whether EURUSD price will return bearish and make a new low or the bullish correction has already started. The 5th wave of the bearish impulse wave which was suspected to be an ending diagonal was not properly formed as the 5th leg ended truncated. Furthermore, the current rally has not yet violated the diagonal pattern and price could drop below 1.11. In the last update, this was discussed extensively. Unless the current rally breaks above 1.1375, the bearish trend since January 2018 might not have completed yet. The following looks at two scenarios.
EURUSD: Ist scenario
The chart above shows how the 5th wave could turn out especially if the price does not progress above 1.1375 to invalidate the setup. The scenario will be confirmed with a break below the blue rising channel and a break below 1.125. The second scenario below supports the bullish run.
EURUSD: 2nd Scenario
If price advances to 1.1375 and above to invalidate the 1st scenario, a bullish correction toward 1.18 and above will be considered. A bullish impulse wave to 1.15-1.16 and then a 3-wave bearish correction could happen before the bullish correction continues toward 1.18-1.21.