Thursday, March 20, 2014

EUR/USD Elliott Wave outlook

By Elliott Wave Forecast

The U.S. Dollar Index is on the move since yesterday when the FED said it would reduce its monthly bond purchases by an additional $10 billion to $55 billion. The U.S. Dollar Index also recovered on hints from Fed Chair Janet Yellen that the bank could begin to raise interest rates sooner than anticipated.

Gold is moving down, the S&P 500 is falling as well, and USD is up against all other major currencies. Our focus today and tomorrow will be on EUR/USD. A decline from 1.3966 March high is in three legs, and now we need to have to wait on important evidences, either to confirm a corrective retracement which would allow us to look for longs once the market bottoms or we wait more signs for a bearish impulse as this one is also one of the possibility.

However, for a bearish case we would need to see further impulsive weakness down 1.3700/40, to make sure it’s an extended wave (iii).

The bearish count has my special attention because of the S&P 500 that can revisit 1820 level from last week. EUR/USD and S&P 500 has positive correlation now. In fact EUR/USD is even weaker than the S&P 500 so if S&P 500 will fall down, which is expected then Euro may lose even more value against the USD. 

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