EURUSD started on the back foot on Monday as the USD recovered some losses. The following October 26 EURUSD Elliott wave analysis shares some insights.
October 26, 2020 / AtoZ Markets – The dollar started the week bullish after another bearish week. The strength is seen across the board as EURUSD dropped 40 pips from the Asian session to the early hours of the London market. The greenback bullish run is expected to continue after the current corrective bounce. This translates to further decline on EURUSD toward 1.175 most probably before the next surge toward 1.2.
EURUSD analysis: fundamental factors
This week should be a sharp one the Euro-dollar pair. The US GDP growth is expected to bounce by 30.8% in the last quarter when the data is released later this week. The US politics still take a central stage. The market mood concerning the US election is geared toward a Trump-positive dollar. At least that’s what the consensus assumes. Trump still trails Biden at the poll. However, history has shown that the polls are often not correct. The election is just ten days away but investors will continue to study the campaign from both parties to decipher the swing of the market mood.
Elsewhere in the Eurozone, the GDP and inflation data will come this week. More importantly, the ECB monetary policy meetings will take a central stage. In the face of a second Covid19 strike, will the ECB compromise and add more to its QE programme or watch further? Traders and investors have sometimes in the past four to five weeks expected comments from the ECB President aimed to devalue the Euro which has been one of the strongest currencies since March. Whatever the ECB comes with, it seems the nearest future of the largest currency pair depends more largely on what happens with the dollar as a result of the US Politics and post-election Fed reactions.
26 October EURUSD Elliott wave analysis
Technically, a bullish EURUSD looks more likely to continue than a slump below 1.16 and 1.17 important support levels. After breaking above the 1.183 last week, the pair is dropping slightly below. However, the current dip still looks corrective. It’s expected that once the dip ends, more rallies should follow. In the last update, we used the chart bellow for the EURUSD Elliott wave development.
In the chart above, we reckoned that the intermediate wave (4) ended at 1.161. A bullish impulse wave rally should follow to 1.2 and 1.22. Wave 1 and 2 of (5) completed at 1.183 and 1.1685. Wave 3 was activated once the price broke above the 1.183 wave 1 top. The chart below shows the updated 26 October EURUSD Elliott wave analysis.
The chart above shows the sub-wave of wave 3 in red. The second wave (in red) is corrective and could continue to 1.1785-1.1762 (50-61.8% Fibonacci retracements) before the 3rd wave of 3 emerges above the corrective channel toward 1.2-1.21. Unless the price breaks below 1.1685 wave 2 low, EURUSD outlook remains to the upside.