Eur/usd - page 489
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EUR/USD Elliott Wave Analysis Pointing To A Return To Range Lows
The most recent EUR/USD Elliott Wave update suggested that a clear bearish structure is developing in the currency pair from August 18 highs at 1.1366, but that a downside break is lacking. From a traditional technical analysis view, the pair is considered to be in a range, while the Elliott Wave count indicates that the pair is nesting for a larger move to the downside.
A nest essentially occurs when the broader structure is seen subdividing into small structures, with deep retracements, giving the look of a range. The last update published on September 22 indicated that the pair was retracing losses from a prior bearish substructure, but was expected to once again turn lower. The decline seen in the pair today has suggested that the retracement has completed. This week’s highs at 1.1279 have been marked as wave (X).
The previous bearish structure from September 8 highs unfolded as a three wave corrective structure that completed at September 21 lows and has been marked as wave (W). The WXY labeling is used to indicate that a double corrective structure is taking place, essentially two consecutive ABC corrective structures joined together.
Wave (Y) is expected to break the pair to fresh lows, but it is important to note that the wave structure will subdivide into a further ABC structure, and as the pair is currently nesting, probabilities remain high that the next decline will once again be short-lived, and accompany a deep retracement. For this reason, it is expected that wave (A) of wave (Y) will take the pair towards range lows at 1.1130 prior to a pullback in wave (B) of wave (Y).
The broader wave structure shows a 55-day correction from Brexit lows completing at 1.1366, and that the bearish structure from early May highs remains intact. The previous Elliott Wave update included a trade setup with targets at range lows seen on the daily chart at 1.0570. While this will be an important area for the currency pair, it is expected that this current bearish structure will take the pair to fresh multi-year lows.
The invalidation for the current wave count remains at 1.1366.
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Yesterday the EURUSD initially fell but found enough buying pressure at 1.1195 to trim some of its losses but still closed in the red however in the middle of the daily range, in addition managed to close below the previous day low, which suggests a bearish momentum.
The pair is trading above all three moving averages 10, 50 and the 200-day that are acting as dynamic supports.
The key levels to watch are: a 61.8% Fibonacci retracement at 1.1347 (resistance), 50% Fibonacci retracement at 1.1264, the 200-day moving average at 1.1203 (support), and a daily support at 1.1097.
The single currency recorded a decline against the US dollar on Tuesday. After a volatile session, the euro lost 40 pips at a closing price of 1.1213. If the downward trend continues, most likely the euro will test the first support located at 1.1100. Otherwise, looking to the upside, the pair will test the resistance at 1.1286.
ECB’s Draghi Continues to Promote Fiscal Expansion
ECB President Draghi looked to placate members of the German Bundestag with a sympathetic appraisal of the effect of very low interest rates, but his main message was again the urgent need for fiscal and structural reform measures to boost growth.
There was no specific commentary on the prospects for monetary policy in the short term and no hints that the bank is considering any immediate move to relax monetary policy further.
In Draghi’s view, the monetary policy pursued by the ECB has maintained price stability and countered the threat of a new ‘Great Depression’.
He also insisted that low interest rates today are necessary for a return to higher interest rates in the future, a not very subtle attempt to persuade the German government to change policy. In his view, patience is needed to allow the measures to develop their full impact.
Draghi continued to insist that the ECB is counteracting risks to price stability using all necessary tools in its mandate.
Once again, the ECB chief’s main point was on the need to seize the opportunity to deliver reforms.
Structural reforms were necessary to create the investment opportunities with rising productivity and employment. Overall, in order to reap the full benefits of monetary policy measures, other policy areas must contribute much more decisively both at the national and European level.
The call for expansionary fiscal policies is inevitably very sensitive in Germany given the insistence from Chancellor Merkel and Finance Minister Schaeuble that Eurozone fiscal discipline needs to be sustained.
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EUR/USD is stable at 1.1212.
The single currency was trading close to unchanged against the US dollar on Wednesday. The short term outlook remains negative and breakthrough of yesterday's low will drag the pair further downwards. Support is located at 1.1100 and 1.0980. Resistance is seen at 1.1286 and 1.1400.
Yesterday the EURUSD went back and forward without any clear direction but still closed in the red however in the middle of the daily range, in addition managed to close within the previous day range, which suggests being clearly neutral, neither side is showing control.
The pair continues to trade above all three moving averages 10, 50 and the 200-day that are acting as dynamic supports.
The key levels to watch are: a 61.8% Fibonacci retracement at 1.1347 (resistance), 50% Fibonacci retracement at 1.1264, a daily resistance at 1.1237, the 200-day moving average at 1.1203 (support), and a daily support at 1.1097.
During today's Asian trade, the US dollar is stable against the euro. By the morning was worth $ 1.1221 versus $ 1.1217 at the close of the North American market on Wednesday.