EURUSD approaches 1.1 as the bullish recovery from 1.088 low persists. The following EURUSD Elliott wave analysis looks at what could happen next.
October 07, 2019 | AtoZ Markets – The Dollar is looking weak so far in October after some weak data from the United States in addition to the uncertainties building around the US-China trade talks coming later this week. EURUSD is building gradually on the recovery from 1.088. However, the price remains under the bearish influence until it breaks above 1.11 again. The main focus of the market this week will be on the US-China trade talks on Thursday and the monetary policy meetings in the US and Euro-zone. Will the US-China have a deal or not? Will it be inconclusive and more meetings be scheduled? Will the Fed cut the rates again? How will the ECB proceed with its plan to stabilize the economy of the zone? Will the Euro-group meeting involve questions on Brexit? All these are the major triggers this week. Meanwhile, EURUSD price is climbing gradually although the momentum of the move doesn’t look assured enough.
The Fed chair will deliver speeches from Monday to Wednesday at different events before the FOMC meeting later on Wednesday. Unless the event comes out excessively hawkish or dovish, the market is expected to be in a cautious mood ahead of the US-China trade talks on Thursday in Washington.
Besides, the Fed might desist from any rate cuts until the next meeting after accessing its positions in relation to outcomes from Washington and the ECB meeting on Thursday. In its last FOMC meeting, the Fed was positive about the general economic growth. The last employment data showed a better employment rate. The last rate cut was generally seen as political after the ECB commenced quantitative easing a week before. With the ECB meeting coming later today, the Fed might wait and keep the rates unchanged. The ECB, on the other hand, has been able to stabilize the Euro against other currencies except for the Dollar. We will have to wait and see their next moves.
EURUSD analysis: important price levels
Resistance Levels: 1.11, 1.125, 1.141 and 1.152. If EURUSD breaks upside, these are the levels to watch for resistance.
Support Levels: 1.088, 1.08. If the price breaks below 1.088, we should see it hit 1.08 or below.
EURUSD Elliott wave analysis
The bearish run since January 2018 still remains intact. As explained in the last update, unless the price breaks above 1.11, the current recovery might be another minor bounce leading to a new low
The new chart above suggests further decline as a bearish impulse wave emerges from 1.255. The current bounce is close to the trendline from 1.14. If the price breaks below the blue channel, this currency pair is expected to decline further to 1.08 or lower. However, if it breaks above 1.11 (and above the red trendline), we might see further rallies to 1.125 and 1.14 or above depending on what triggers the move. The overall trend is still bearish.