EURUSD has gained over 2% as the dollar fell by Biden’s victory. The following November 9 EURUSD Elliott wave analysis shares some technical insights.
November 9, 2020 / AtoZ Markets – EURUSD bounced from the 1.16 bottom on Wednesday after the US election. The currency pair has gained nearly 290 pips since then with Biden emerging as the President-Elect according to projections from most media houses. Prior to the polls, the markets supported a Biden win which put more pressure on the USD. The dollar fell across the board just as expected and then EURUSD rallied to challenge the 1.19 top. Further rallies are very much likely above the 1.2 psychological level up to 1.22 in the medium-term. However, before that could happen, we might see a minor bearish correction back to 1.18 or slightly below from the intraday time frame.
Aside from the election last week, the FOMC left rates unchanged at 0-0.25% and didn’t give further clues regarding extra stimulus package although it emphasized the need amid the second wave of the virus. Also, the US employment data came better than market consensus. The unemployment rate in October dropped to 6.9% while 630,000 new jobs were registered. Later this week, we will hear speeches from the ECB President and the Fed Chair.
Meanwhile, there is a huge development concerning Covid 19 vaccines. Pfizer has confirmed that its vaccines can prevent 90% of Covid infections in a large study. The headline added to gains across equities as safe-havens fell sharply. However, USD stays stable and EURUSD gets rejected at 1.19.
November 9 EURUSD Elliott wave analysis
Technically, the dip from 1.201 (September 2020) to 1.16 (early November) completed a corrective double zigzag pattern – wave 4. In the last update, we used the chart below.
In the last update, wave (4) didn’t grow as deep as expected. With the current bounce to 1.19, we could say wave (5) has emerged with a double bottom at 1.16. As the new chart below shows, wave 1 of (5) is currently ongoing as part of possibly a bullish impulse wave pattern to 1.22 at least.
If the market takes this path, it means the USD will weaken further. That seems to be highly probable given the expectation of extra stimulus and the final stages of Covid vaccines that should build investors’ hopes. There are not many high-impact economic news releases this week. However, the market shouldn’t fall short of decent volatilities as it focuses more on social and geopolitical events.