EURUSD dropped below 1.132 on Monday after the USD gained bullish traction. The following share technical insights based on Elliott wave theory.
01 July, 2019 | AtoZ Markets - The Euro-dollar currency pair dropped close to 1.13 on Monday after the weekend's bearish spike. The USD gained bullish traction after the US and China agreed on a trade truce. The trade talk between the two countries is expected to restart and the market will hope an agreement is reached this time around.
The USD could maintain the current demand until Friday when the US employment data will be released. The US ISM Manufacturing PMI data will be released during the New York session today. Price is currently retracing and consolidating at 1.133. If the current minor rally is limited below 1.135, further dip to 1.13 and 1.127 is very much likely.
EURUSD analysis: important price levels
To the downside, the first bearish target level is between 1.13 and 1.127. Below this price zone, a free fall could happen to the next support zone at 1.118-1.12. The final bearish target remains at 1.1050 which is a price pattern support level. To the upside, if the current dip is supported at 1.13-1.127 zone, a fast rally could follow. 1.135 and 1.1414 will quickly be the first bullish target and resistance levels. A bridge above 1.1412 will open the way to 1.145, 1.15 and 1.157 resistance levels.
EURUSD Elliott wave analysis
The technical outlook of EURUSD seems simple. The long term trend is bearish while the short term trend is bullish. However, the current bullish trend to 1.1412 looks corrective and still within the long term bearish zone. In the last update, we had two scenarios printed on a chart window. The chart below was used.
The possibility of a fall was high after price completed what looked like a zigzag correction at 1.1412. The pattern has been confirmed by the current dip. However, it's not very clear whether the long term bearish impulse wave that started in January 2018 has completed at 1.11 or a lower leg will still happen. If it has ended, the current dip should be limited at the 1.13-1.127 zone. Price has now dropped closed to the zone as the new chart below shows.
It will be interesting to see how price reacts at the support zone. A free fall below should hit 1.118 and continue the long term bearish trend to a new low. The most important short term economic event this week is the US Non-Farm Payroll which will be released on Friday.