EURUSD jumped 50 Pips in the Asian session as price eyes 1.16. The focus is now on today’s Italian budget meeting. What should be expected next?
Italy earlier announced a 2.5% budget deficit below the EU’S 2% benchmark. There is a new meeting today to decide the budget policy of one of Europe’s most indebted countries. Earlier in the Asian session, Euro jumped by 50 Pips after a local newspaper reported that the nation is planning to restrict its budget deficit to 2% of GDP. Price was close to 1.6 at the opening of the London session. The U.S employment data comes on Friday and the trade war is still a big concern. The direction of EURUSD is still more likely to be influenced by the direction of Dollar as it’s been for most of the year.
Technically, the bears have re-established itself as the Dollar resumes upside. The current rally could end up a correction of the drop from 1.18. The chart below was used in the last update.
Price is still making out for the 5th wave. At the end of the 5th wave, a 3-wave bullish correction will be expected toward 1.1650 before the bears resume. Currently, price is close to an important 1.15 but there has not been any sign of reversal yet. Price could break below 1.15 easily as it happened twice in August. If 1.15 is taken out, the next important level is 1.13 before 1.11.
Price started the current rally from just above 1.15, gained about 85 Pips to hit close to 1.16. With the current price move, there are two very likely scenarios.
EURUSD technical analysis – 1st Scenario
This scenario is the continuation of the last update. Price was rejected at 1.15 and will be expected to continue the bullish correction. The next price zone of interest is 1.166-1.7 Fib-correction levels. Sellers will be looking for bearish clues at this zone. If the rally continue above 1.17, the bulls might take complete control again – above 1.18 up to 1.2. If price is rejected at the zone, a dip below 1.15 to 1.13 is much likely to follow.
EURUSD technical analysis – 2nd Scenario
This scenario assumes the bearish impulse wave is not yet complete. The current rally is the 4th wave and price gets one more leg downside. This scenario should be given serious consideration as there is no notable bullish reversal signal yet. If price breaks below the wave 4 rising channel, a drop to 1.15 is very likely. Price may not be rejected this time around as their might be a strong bearish trigger to take it down to 1.145-1.14 before the next bullish bounce.
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