EURUSD continued last week rally and has stayed stable above 1.14 ahead of today's Fed meeting. The following looks at the technical side based on Elliott wave theory.
January 30, 2019 | AtoZ Markets - The currency market is expected to see some big volatility today as the FOMC meets to decide on its first rate decision of the year 2019. Prior to the December 2018 rate hike, there were expectations that rates will be raised many times this year. However, a dovish tone of 'patience' leading to a downgrade of 2019 projections from the Fed since then, has suggested that rates might remain unchanged or even cut today. The market already expected this and might just price in. Aside the Fed rate decision, the US-China trade talks still linger and the UK-EU Brexit deal is also a major risk on the EURUSD.
EURUSD dropped about 280 Pips after a clear corrective zigzag pattern completed at 1.1570. The drop from 1.1570 was very much expected to complete a bearish impulse wave up to 1.13 or 1.1215 before a big bullish correction happened. On Friday, price completed the bearish impulse wave just around 1.13 and has gained more than 120 Pips since then, to trade above 1.14. The rate was expected to be corrective which indicates that the bearish trend might just continue especially if price does not break above 1.1570 resistance. EURUSD will drop massively if the Fed raise rates against market expectation. Price should be able to adjust to anything aside that.
EURUSD Elliott Wave Analysis and Important Price Levels
In the last update, a dip in price was expected after price went sideways to complete a triangle pattern which marked the 4th wave of the bearish impulse wave from 1.1570. After the triangle pattern, price broke downside and completed the 5th wave at 1.13 before a big push upside to start what could be a 3-wave corrective rally.
The rally from 1.13 looks impulsive and might just be the first leg of a higher correction to 1.15 which has been a significant price level for many months. Price might continue to 1.15 before returning downside if it completes a corrective pattern. A dip below 1.13 should follow. However, a further price surge above 1.1570 might hamper the bearish development and we might just start a new wave count from 1.13.
Please share your thoughts with us in the comment box below.