EURUSD continues the recovery with a break above 1.12. The following shares more insights based on Elliott wave theory.
April 30, 2019 | AtoZ Markets - On Tuesday, EURUSD hits above 1.12 to continue the recovery that started last week following a fast dip to 1.111. The currency pair broke above the 1.1175 intraday resistance yesterday to 1.1185 before dropping to re-test 1.1175. The dip, however, didn't go further below 1.1175 before resuming upside in the London session today to hit the highest price in about a week. The Euro-zone GDP released earlier today exceeded expectation with 0.4% QoQ. In addition, the April German HICP inflation also came better than expected with 2.1%.
EURUSD gaining on USD weakness?
After last week US GDP data, the USD has been on a decline after being on top of the Forex chain for the better part of 2019. The USD weakness is currently seen across the board. The market will look forward to the CB Consumer Confidence for short term clues later today before the mighty FOMC meeting on Wednesday. If all these compliment the weakness further, EURUSD should recover more with long term eyes on 1.18 and 1.21 and short term targets at 1.13 and 1.145. Furthermore, the DXY looks overbought therefore faster declines are expected to follow unless the FOMC comes with a big surprise.
EURUSD Elliott wave analysis and important price levels
The currency pair is obviously starting a bullish correction after a bearish wave that lasted over a year completed last week. We have been following this price pattern for quite some time and the ending diagonal 5th wave (which ended at 1.111) helped with a reversal signal. In the last update, we looked at the price formation at the bottom where the reversal has happened so far. The chart below was used.
Assuming price has bottomed and a 3-wave bullish correction is to follow to 1.18-1.21, an impulse wave or a leading diagonal should lead the way. With the way price reacted, an impulse wave looks more suitable if a break above 1.1175 happens as the chart above indicated. At the moment, this wave forecast is playing out perfectly. Here is the new update.
A bullish impulse wave could be in progress, toward 1.13-1.1325 price zone before a 3-wave dip of the same degree follows. The expected corrective rally toward 1.18-1.21 is still a long way to go. The FOMC tomorrow will most likely cause a big price movement. Unless a dip below 1.111 to 1.105 happens, the bullish correction will continue.
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