close icon

EURUSD: When the Fed Supports the Elliott Wave View

Following a recovery of more than 500 pips in a little over a month, EURUSD suddenly crashed from 1.1815 to 1.1570 last week, erasing half of its recent progress in just a few days. The selloff came after the Fed raised its benchmark interest rate for the third time this year on Wednesday and promised more hikes in the not so distant future.

Rates hikes by the Fed make the U.S. dollar more expensive, so it makes sense to expect the greenback to rise against its major rivals, including the Euro. However, we have seen plenty of counter-intuitive surprises before and decided to see if the Elliott Wave Principle will also confirm the negative EURUSD outlook. The charts below was sent to clients before the open on Monday, September 24th. As visible, while the pair was hovering around 1.1750, both the primary and the alternative Elliott Wave counts suggested a bearish reversal was on the horizon.
EURUSD Elliott wave analysis prediction
According to the primary scenario, a slump of roughly 100 pips could be expected to drag EURUSD down to approximately 1.1650 before the uptrend resumes. The back-up plan allowed for a much larger plunge in wave c) of an expanding flat correction, following a five-wave impulse from 1.1301 to 1.1734. The Federal Reserve was supposed to apply pressure on EURUSD and the Elliott Wave outlook was negative anyway. Conclusion: it was not a good time to be long the Euro. A week later, the updated chart below shows how the situation developed.
EURUSD crashed after Fed rate hike
The crash we have been anticipating was postponed by a new swing high to 1.1815 on Monday, which only made buying EURUSD more risky. The following four days turned into a real nightmare for the bulls as the exchange rate lost 245 pips by Friday.

More often than not, the market does the exact opposite of what common logic dictates. This time, however, the Fed’s interest rate hike was the catalyst that validated our Elliott Wave analysis. The problem is the nature of the next catalyst is rarely known. Reading the charts through the prism of the Wave principle remains the best way to approach the market for traders, who want to stay ahead of the news.

What will EURUSD bring next week? That is the subject of discussion in our next premium analysis due out later TODAY!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

GBPUSD To Resume Uptrend Once Correction Ends

The Brexit saga continues as Boris Johnson’s re-election puts Britain firmly on the path of leaving the EU on January 31st 2020. And while the results of the June 2016 referendum caused a crash to 1.1650 by October 2016, GBPUSD is trading near 1.3100 today. The chart below reveals the structure of the recent recovery…

Read More »

GBPCAD Can Reach 1.9000 Before the Bears Return

GBPCAD bulls have been on a roll the past four months. The pair is currently trading above 1.7330, up 9.1% from its early-August low of 1.5875. And while the Forex market is not the place to rely on a trend for very long, it is not uncommon for GBPCAD to make large moves in either…

Read More »

EURAUD Impulse Pattern Keeps the Bulls in Charge

Twenty days ago, EURAUD managed to stop the bleeding and form a bottom at 1.5976. As of this writing the pair trades around 1.6250 after reaching 1.6324 on November 20th. Is the uptrend still in progress or should we prepare for the bears’ return? A look at EURAUD ‘s hourly chart through an Elliott Wave…

Read More »

EURUSD Turns Up Ahead of Brexit Talks Breakthrough

EURUSD is up by 260 pips since the beginning of October. The pair climbed from 1.0879 to 1.1140 in just 14 trading days. The rally appears to be fueled by optimism regarding a possible Brexit deal and the tentative “phase-one” agreement between the US and China. In our opinion, however, there is something more to…

Read More »

USDJPY Pattern Makes More Sense than Politics

The last two weeks were different like night and day for USDJPY traders. The pair fell from 108.47 to 106.48 during the first three days of October and eventually closed the week in negative territory. The last five trading days, on the other hand, told a much different story. Last week, USDJPY rose from 106.66…

Read More »

GBPAUD Elliott Wave Setup Supports the Bears

Between July 30th and August 26th, GBPAUD managed to recover from 1.7561 to 1.8337. Despite the no-deal Brexit prospects, the Australian dollar turned out to be even weaker than its British rival for almost a month. However, GBPAUD is down by roughly 400 pips since August 26th. Traders are probably wondering if this is a…

Read More »

EURUSD Absorbs Economic, Trade War and G-7 News

EURUSD made a new low last week. The pair fell to as low as 1.0963 on Friday adding to the downtrend it has been trading in since February 2018. The last time the European currency traded this low against the greenback was in May 2017. The last few months have been characterized by new lows,…

Read More »

More analyses