EURUSD is dropping toward 1.11 after the preceding minor rally ended below 1.125. The following EURUSD Elliott wave analysis looks at the most likely scenario.
January 08, 2020 | AtoZ Markets – The Euro-dollar currency pair dropped below 1.12 on Tuesday as the preceding rally from 1.1125 halted. The price is currently testing the 1.1125 intraday support level. A dip to the 1.11 critical level will most likely happen. However, the intermediate bullish correction is still ongoing amid a wild bearish trend. The major attention of the market is on the global geopolitical affairs especially the crises between the US and Iran. The US employment data, coming on Friday, is another event to watch out for on a smaller scale.
EURUSD has been on a bullish run since October 1. This is partly due to the ECB easing policies and more clarity on the Brexit deal. In addition, the USD has performed rather weakly having seen its safe-haven advantage depleted by the US-China trade deal optimism. However, the recent US-Iran crises have not helped the greenback. Investors look at Gold and other safer assets to cut down risks. The EU and UK are expected to finalize the Brexit agreement before the January 31 deadline. This will come a week after the January ECB meeting. EURUSD price might hit close to 1.13 if it holds above 1.1060 before resuming the bearish trend.
EURUSD Elliott wave analysis
Technically, from the Elliott wave perspective, EURUSD rally from 1.088 is corrective. The zigzag pattern is emerging. With such pattern, it’s either the bullish correction will continue higher to complete a more complex corrective pattern (double/triple zigzag) or the bearish trend will continue below 1.088. However, on either occasion, the EURUSD price will have a sharp decline to the 1.10 psychological level. At the moment, we focus on the zigzag pattern from 1.088. As we had in the last update with the chart below, we expected an ending diagonal pattern to complete this corrective structure around the 1.128-1.13 resistance zone (Charting tools from TradingView).
Since the last update, wave iv of (c) has lasted longer and currently about to complete a minor zigzag structure around the 1.11 critical level as the new chart below shows.
If EURUSD price bounces off 1.11 and completes an ending diagonal at 1.128-1.13, we should see a fast decline to 1.10 at least.