EURUSD fell rapidly below 1.1150 to hit a fresh 7-week low. The following technical insight is based on the Elliott wave theory.
July 24, 2019 | AtoZ Markets - The Euro continues its weakness after disappointing data from France and Germany. The French and German Services and Manufacturing PMI data came worse than expected. EURUSD plummets below 1.1150 for the first time in over seven weeks. This situation could even be worse if tomorrow's ECB rate decision and forecasts came more dovish than expected. From a technical perspective, EURUSD is expected to drop further to the 1.105-1.1025 zone.
Monday's 1.1180 breakout led to a hit of 1.1150 after the close of trading on Tuesday. Today, it has dropped further to 1.1135 - close to the 1.11 handle. The US flash Manufacturing PMI data will come later today before Thursday's ECB decisions and forecasts. The EUR remains under immerse bearish pressure. Whether the ECB will be able to trigger a bullish reversal tomorrow remains to be seen.
EURUSD technical analysis: important price levels
Price is now very close to the 1.11 critical support level. Below this level is the 1.105-1.1025 technical diagonal support zone. If the ECB decision tomorrow came dovish, price is expected to dip toward this zone. To the upside, the price might rally swiftly to retest the 1.118-1.12 support-turned-resistance zone before crashing further. A breach of the 1.1285 might lead to further rallies above the 1.1412 resistance level.
EURUSD Elliott wave analysis
The 5th wave ending diagonal of the bearish impulse wave that started in January 2018 is still ongoing. The target for the end of the pattern was set around 1.105-1.1025 but a breach of this zone is also very much possible. The 5th wave ending diagonal will only be invalid if the price dips to 1.0945. In the last update, we looked at the last leg of the diagonal - wave c of (v) after wave a and b ended at 1.119 and 1.1285 respectively. The chart below was used in the last update.
Price didn't make any minor pullback before dropping further as the new chart below shows.
Price is now very close to the 1.111-1.11 support zone. A dip below is expected to happen. Perhaps a minor pullback toward 1.116 or 1.118 could precede that. The ultimate bearish target zone remains at 1.105-1.1025.