EURUSD tanked after a strong dollar on Monday. The following November 23 EURUSD Elliott wave analysis shares some technical insights.
After staying rooted to the downside since the last week, the dollar surprised with a massive rally. The greenback gained massively against its major peers. This came hours after another vaccine development drove risk-on sentiments. The dollar was expected to close the day bearish. Alas! all major currencies are bleeding against the buck at the end of the New York session on Monday. Could this lead to a massive near-term breakthrough for the world’s reserve currency? Will the bullish recovery be maintained this week and next week? Technically, the dollar has a short-term bullish potential.
Why the rise despite vaccine development? The Fed Chair sounded too dovish last week in his speeches. He reiterated the bank’s intention to offer more support to the economy in any way. However, full recovery could delay until 2023. The market now anticipates more QEs from the bank later this week. Is the market reading a monetary policy failure in advance against the general expectation? On the macroeconomic front, the US Markit PM data came better than expected amid mixed Eurozone PMIs.
November 23 EURUSD Elliott wave analysis
From the technical perspective, EURUSD should maintain a bullish range in the coming weeks. The range could be bounded between 1.19 and 1.16 in the medium-term. The breach of any of these levels to lead to a larger bullish or bearish continuation respectively. Today’s fast dip covered all of last week’s price activities. We could be heading toward the 1.175 support level before 1.16 with the 1.1912-1.1905 providing a potential double top ceiling.
In the last update, we used the chart below. A double zigzag structure was identified to complete wave (4) of the long term bullish trend that started in March.
The chart below shows the November 23 EURUSD Elliott wave analysis. Since the last update, the price has not yet completed the 4th wave after wave (3) ended at 1.201 on September 1. With the kind of structure developing, we can still hold on to a potential double zigzag down to 1.15-1.155. Alternatively, a triangle pattern ranging between 1.16 and 1.19 as earlier mentioned could emerge.
We will have to see the direction and momentum of the next moves to ascertain where next in the long term the Euro-dollar is heading. Before that time, we can anticipate further decline overall this week especially if the Fed holds on further.