EURUSD Elliott wave analysis: price retraces toward 1.13

EURUSD is making a corrective bounce toward 1.13. The following technical insight is based on the Elliott wave theory.

April 08, 2019. AtoZ Markets – The Euro-dollar currency pair was short of the 1.1175 support level last week as the pair looks for bullish clues. The dollar rose slightly on Friday after an upbeat NFP data but quickly dropped across the board afterwards. This week, the dollar has continued last week weakness and it seems this currency pair is taking advantage of this to make some moves upside. 1.13 and 1.15 have remained the most attractive price levels since the second half of 2018. Price is currently making another move toward 1.13 before returning downside.

EURUSD fundamental analysis

Traders and investors will be wary of this currency pair on Wednesday until the FOMC meeting. Also, the ECB press conference will hold several hours before the FOMC on the same day. The Euro-zone economy has been facing tough times since last year. Italy continues to face economic battles while Germany, the largest economy in the zone, was at the brink of recession. The Brexit uncertainties still pose a big risk. The ECB might surprise the market with a hawkish forecast. This will send the Euro far upside as the market wouldn’t expect it. Dovish comments will be priced in and the market might recover quickly after an initial dip.

The Fed will release its latest forecast from the March meeting on Wednesday. The bank, which surprised the market in the last meeting, with a dovish tone is expected to keep the rate unchanged throughout this year. There was a mixed employment report from the US last week. Will there be any surprises on Wednesday?

EURUSD Elliott wave analysis and important price levels

After starting with a dip below 1.12 last week, price failed to stay below it. At the close of the week, the price stayed slightly above 1.12 and has gained on a weaker dollar to rally close to 1.1275. In the last update, we expected one more leg above 1.12 before a dip below 1.1175 low. The chart below was used.

EURUSD is about to complete a 14-month bearish impulse wave. We have spotted an ending diagonal 5th. The chart above indicated a triple zigzag possibility. If the current rally does not extend above 1.14, we should see a further dip to 1.116 or below as the chart below shows.

The diagonal pattern seems to have one more leg to 1.115-1.116 to complete. A new bullish phase albeit corrective is expected to follow to 1.18-1.21 unless the expected dip sinks far below 1.15. The FOMC and ECB meetings on Wednesday will give the needed momentum.

** All charts used are from TradingView

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