EURUSD maintains a rather quiet bullish traction despite Moderna vaccine reports. The following November 16 EURUSD Elliott wave analysis looks at what could happen next.
November 16, 2020 / AtoZ Markets – The euro-dollar currency pair fell below 1.185 after running dry of last week’s bullish momentum. The ECB President in her speech earlier today emphasized that vaccine hopes can help to offset the bearish effect of the second wave of Covid. She added that partial lockdown is enough because the people can now deal better with the virus. Therefore, the devastating effect that happened in the first quarter of the year will no longer be the case.
In the Eurozone, partial lockdowns are extended in France, UK and Belgium. The Belgian PM expressed concerns that lockdowns could be extended until vaccines pass the clinical stage. Talking about vaccines, Moderna caused big waves across the markets early on Monday. It released reports that its Covid vaccines are 94% effective. Last week was Pfizer with a reported 90% efficacy. Stocks and risk-on instruments jumped very quickly while risk-off assets plummeted. Just like we saw last week Monday as well, much of these moves have reversed at the time of writing this report.
Despite massive vaccine effects on the market, the greenback has responded with a much lower momentum. The dollar index which hit 92.85 has now dropped back to 92.7 although with an overall bullish outlook in the medium-term. EURUSD is collapsing after the 1.187 top. Technically, the pair remains corrective, and it’s just a matter of time before it drops lower to test 1.16 and 1.15 support levels.
November 16 EURUSD Elliott wave analysis
As the chart below shows, the November 16 EURUSD Elliott wave analysis suggests further decline to complete the intermediate wave (4). In the last update, we mentioned the beginning of a bearish move below 1.16 especially if the price breaches below the starting point of wave 1 of (5) at 1.174.
Double zigzag wave (4) is very much likely. This will be confirmed by the dip below 1.174. Otherwise, a rally above the 1.192 high might end up invalidating this outlook and force a push above the 1.2. Although the vaccines reports give relief, lockdowns are bound to be extended beyond December. This would have a significant negative impact on Q4 data. In the coming weeks, the central banks will most likely swing into actions. We should expect more QE actions from January as the market digests more reports from Covid vaccines and lockdowns.