2017-10-12
Wave summary:
With a little detour to 132.45 wave C moved higher and has now spiked the 133.25 target. We continue to view the entire consolidation since the low of wave A at 131.70 as a corrective B-wave. Corrective B-waves are the most difficult to decipher and trade, because of the multiple different paths they can take, but that does not change our view, that a C-wave decline lower to 130.73 still is needed.
We are looking for a top in wave B between 133.60 - 133.75 for the expected decline in wave C.
R3: 134.24
R2: 133.75
R1: 133.60
Pivot: 133.22
S1: 133.05
S2: 132.45
S3: 131.81
Trading recommendation:
Our sell-order at 132.65 was hit before the rally higher, so we are short EUR from 132.65 with stop placed at 134.45. If you are not short-EUR yet, then sell near 133.60 and use the same stop at 134.40.
Elliott wave analysis of EUR/JPY for October 12, 2017
2017-10-12
Wave summary:
EUR/NZD continues to rally nicely and as expected. We expect minor support at 1.6648 will be able to protect the downside for the next rally higher to 1.6824 that should complete red wave iii/ and set the stage for a shallow sideways consolidation in red wave iv/ before moving higher towards 1.7005 in red wave v/.
R3: 1.7005
R2: 1.6824
R1: 1.6760
Pivot: 1.6648
S1: 1.6623
S2: 1.6563
S3: 1.6490
Trading recommendation:
We are long EUR from 1.6365 and will move our stop higher to 1.6600.
Breaking forecast 10/12/2017
The growth of EURUSD will continue. The main event of Wednesday - the report from the last meeting of the Fed ("minutes" of the Fed) - has not changed the mood of the markets. The EURUSD rate continued to grow, playing out the diffusion of tension in relations between Catalonia and Madrid. We expect the continuation of EURUSD's rise to the target of 1.1980. Still, after significant increase in recent days, it is possible to retreat to 1.1820. Buy EURUSD from the rollback. The cancellation signal is the breakthrough below 1.1668.
Low inflation worries US policymakers according to the FOMC minutes driving the Dollar lower.
The European majors are on the rise this morning following the release of the FOMC minutes last night that forced the Dollar to retreat across the board. The minutes from Fed's recent meeting indicated that even though most policymakers thought that another rate hike during this year is appropriate there were also a few among them that were worried about the low inflation. To be precise, the notion that the current low inflation environment might not be transitory is what worries the FOMC members and some of them also suggested that rate hikes might need to stop until progress in the inflation front is evident. Following the release of the minutes the odds of another rate hike in December didn't change but the Dollar retreated further as traders expected a clearly bullish tone coming from this release.
This development does little to change the fundamental outlook of the US economy that is fairing relatively well considering the lack of progress in certain sectors and the toll two hurricanes took last month. Nevertheless, investors were eager for the FOMC minutes to act as a fresh catalyst to drive the Dollar higher and now that this went wrong their focus will be on Friday's inflation and retail sales figures. Given the performance of the Dollar after last week's NFPs and yesterday's minutes' release the stakes are high for Friday's figures: if Dollar traders get another bearish surprise in such a short timeframe they might start doubting the case of a strong Dollar towards the end of the year and look to take more exposure off the table. In the interim, the Dollar is expected to trade with a heavy bias over the next 24 hours are traders have little reason to buy the US currency at this point.
Euro surges to fresh highs as Draghi is scheduled to speak in Washington today.
The Euro is extending its gains this morning trading around the 1.1875 level after yesterday's FOMC minutes' release that drove speculators to dump the Dollar. The shared currency has seen strong demand since the beginning of the week having gained almost 2% from last Friday's lows and it seems that there's more room to the upside. The fundamental backing behind Euro's surge comes from two factors: Dollar's recent weakness after the NFPs and FOMC events and expectations for ECB's tapering operations due to begin in the next couple of weeks.
The second factor will be front and center today as ECB President Mario Draghi will make a public appearance to speak on a panel in Washington and given that the discussion will revolve around monetary policy traders will be focused on his remarks about ECB policy. It will be interesting to see what Draghi has to say today and more importantly what the ECB plans to do by the end of the month as the Euro is again trading close to its yearly highs. ECB policymakers know that when tapering is announced the Single currency will rally and given its current price it is likely that it will overshoot ECB's preferred trading levels. Whether this will force the central bank to announce a "lighter" tapering initiative remains to be seen but it's clearly something that Euro traders need to keep in mind.
The European majors are on the rise this morning following the release of the FOMC minutes last night that forced the Dollar to retreat across the board. The minutes from Fed's recent meeting indicated that even though most policymakers thought that another rate hike during this year is appropriate there were also a few among them that were worried about the low inflation. To be precise, the notion that the current low inflation environment might not be transitory is what worries the FOMC members and some of them also suggested that rate hikes might need to stop until progress in the inflation front is evident. Following the release of the minutes the odds of another rate hike in December didn't change but the Dollar retreated further as traders expected a clearly bullish tone coming from this release.
This development does little to change the fundamental outlook of the US economy that is fairing relatively well considering the lack of progress in certain sectors and the toll two hurricanes took last month. Nevertheless, investors were eager for the FOMC minutes to act as a fresh catalyst to drive the Dollar higher and now that this went wrong their focus will be on Friday's inflation and retail sales figures. Given the performance of the Dollar after last week's NFPs and yesterday's minutes' release the stakes are high for Friday's figures: if Dollar traders get another bearish surprise in such a short timeframe they might start doubting the case of a strong Dollar towards the end of the year and look to take more exposure off the table. In the interim, the Dollar is expected to trade with a heavy bias over the next 24 hours are traders have little reason to buy the US currency at this point.
Euro surges to fresh highs as Draghi is scheduled to speak in Washington today.
The Euro is extending its gains this morning trading around the 1.1875 level after yesterday's FOMC minutes' release that drove speculators to dump the Dollar. The shared currency has seen strong demand since the beginning of the week having gained almost 2% from last Friday's lows and it seems that there's more room to the upside. The fundamental backing behind Euro's surge comes from two factors: Dollar's recent weakness after the NFPs and FOMC events and expectations for ECB's tapering operations due to begin in the next couple of weeks.
The second factor will be front and center today as ECB President Mario Draghi will make a public appearance to speak on a panel in Washington and given that the discussion will revolve around monetary policy traders will be focused on his remarks about ECB policy. It will be interesting to see what Draghi has to say today and more importantly what the ECB plans to do by the end of the month as the Euro is again trading close to its yearly highs. ECB policymakers know that when tapering is announced the Single currency will rally and given its current price it is likely that it will overshoot ECB's preferred trading levels. Whether this will force the central bank to announce a "lighter" tapering initiative remains to be seen but it's clearly something that Euro traders need to keep in mind.
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