EURUSD dropped to its lowest in a week. November 2 EURUSD Elliott wave analysis anticipates further corrective decline in a very volatile week.
November 2, 2020 / AtoZ Markets – EURUSD remains on the back foot as the USD crave for more recoveries. The currency pair has now shed all of the October gains as a result of risk aversion. The first part being Covid resurgence. Partial lockdowns are being enforced in Europe and now a 4-week movement restrictions in some sectors of the UK. Risk haven like the dollar benefits from such moments of uncertainties. The second part is the US election uncertainties and risks. After breaking below 1.169 intraday support last week, the euro-dollar stabilizes below 1.165 a few hours after the London open as the Euro-zone PMIs came within market consensus.
Major economic and non-economic events
This week will be very volatile for global markets especially currencies. High impact events led by the US election could make the biggest week of this year. The near-term future of the dollar so much depends on what the results say. Aside from the US election, traders and investors will also look forward to the FOMC on Thursday and the NFP on Friday.
With Covid-19 slowing down business activities in the US and Europe, the FED’s FOMC will meet on Thursday to decide whether to activate more QEs or wait till the new President settles in to know how large the next stimulus will be. If Trump regains the seat, the FED might continue with its normal program. Otherwise, we might not see much action. Nevertheless, the committee members will make forecasts and discuss the current impact of the virus on the economy. A day after the FOMC, we have the non-farm payroll which could add more momentum. The market expects 600k new jobs in October and a lower unemployment rate (7.7%) than September’s.
Despite the macroeconomics and the bank policies, the biggest event this week is the US elections. Pollsters have rounded up their surveys. The polls support a Biden win which might not be good for the Dollar. If the polls are correct, EURUSD should gain toward 1.22 or higher. A Trump win could drag the largest currency pair to 1.12 or even 1.1.
2 November EURUSD Elliott wave analysis
With the current decline, our EURUSD Elliott wave outlook has changed to a much deeper intermediate wave (4). In the last update, where we used the chart below, we expected wave (4) to have ended at 1.1612 and wave (5) in motion toward 1.22 and above.
Therefore, we started a bullish actionary wave from 1.1612 with subwave 1 and 2 ending at 1.1833 and 1.1685 respectively. However, wave 3 of (3) rally above 1.1833 couldn’t be sustained. With price approaching 1.1612 support, we anticipate a double zigzag corrective wave (4) toward 1.152 and 1.1365 as the new chart below shows
A lot will depend on the US election and the high-impact events that follow. Perhaps, we will get a much clearer outlook as these events could cripple short-term technical expectations.