EURUSD slumped to the lowest price in the last 2 and half years after Wednesday’s FOMC rate cut. The following looks at what could happen next based on the Elliott wave theory.
August 01, 2019 | AtoZ Markets – The Federal Reserve cut rates by 0.25% on Wednesday at the FOMC meeting. The hawkish comments that followed sent the USD upside. The buck ruled over all the majors and continued its multi-months dominance. The USD index after the meeting rose to 26-month high while the EURUSD tanked to its 30 months low. The dip continued on Thursday and EURUSD hit 1.1026 before making a slight recovery above 1.1050 after a disappointing US PMI data. The USD is still very much strong and the EURUSD bearish trend that started in January 2018 is finding support for a major bullish correction.
The market might continue the current recovery toward the 1.11 critical level especially if the US employment data on Friday comes worse than expected. After June’s job growth surpassed expectation when it came at 224,000, the market expects a softer job data in July. The market expects US NFP for July to come at 170,000. A wide variation of 50,000 or more will cause a big deflection.
EURUSD analysis: important price levels
If the NFP disappoints by 50k or more, EURUSD should rally toward 1.11 and even above. It could then advance to 1.12 and 1.1412 resistance levels. A better than expected data would see the price tank further toward the 1.10 handle and even deeper.
EURUSD Elliott wave analysis
From the Elliott wave perspective, EURUSD was just one leg from completing the long term bearish impulse wave which started in January 2018. The 5th wave diagonal was expected to end at the 1.105-1.1025 zone. Price hit this target zone and bounced as expected in the last update where we used the chart below.
Ideally, a break above the falling channel will be the ultimate confirmation that the price is starting the bullish correction. The new chart below expects the development of a minor bullish impulse wave toward 1.13.
The first surge should advance to 1.115-1.118 before a minor retracement which should be followed by a massive break above 1.12. Friday’s US employment could have a big impact on the short term price movements.