close icon

Two Months Ahead of EURUSD ‘s Turkey-Driven Selloff

EURUSD’s selloff has resumed. The pair fell to as low as 1.1432 earlier today, following a Financial Times report stating the European Central Bank is concerned about some European banks’ exposure to Turkey’s currency crisis. Spain’s BBVA, Italy’s Unicredit, and France’s BNP Paribas were among the big names mentioned in the report. Now, let’s see how bad it is on the price chart of EURUSD below.
EURUSD Turkey crisis Elliott Wave chart
Today’s EURUSD slump fits into the position of wave 5, following a triangle wave 4 within a larger five-wave impulse to the south from 1.2556. As you can see, the Financial Times report only reinforced a bearish trend, which has been in progress for months already.

As they usually do, the media’s explanation for today’s EURUSD weakness makes sense. The problem is that it indirectly suggests that without the FT report, today’s EURUSD crash would not have happened. As Elliott Wave analysts we cannot accept that. In fact, the chart below, sent to clients on June 20th, proves that the stage for the European currency’s current plunge was set nearly two months ago.
EURUSD Elliott Wave analysis June 20
As it turns out, the Elliott Wave principle managed to prepare traders not only for the recent decline, but for the occurrence of the entire triangle pattern, as well. Given the bigger picture outlook, which is also included in our premium analyses, we assumed a five-wave impulse was developing from the top at 1.2556.

Keeping in mind the guideline of alternation, it made sense to expect a sideways correction in wave 4, most likely a triangle, since wave 2 was a sharp zigzag recovery. If this count was correct, as long as 1.1852 remained intact, waves “c”, “d” and “e” of 4 had to emerge before the bears return to drag EURUSD to a new low in wave 5.

This chart did not tell us “why” this was going to happen. It did not come up with explanations like “Trump’s trade war weighs on the Euro” or “Turkey’s crisis threatens European banks.” Instead, it only provided us with a road map for the most likely Elliott Wave scenario. The news that came out after that simply fit into it and was quickly absorbed by the pattern. We believe that if it wasn’t the Financial Times report and Turkey’s crisis, something else would have triggered EURUSD’s slump. Unfortunately, you never know exactly what or when. That is we prefer to rely on the Elliott Wave principle for guidance.

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



Stay informed with our newsletter

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

Privacy policy
You may also like:

Ahead of GBPUSD in Both Directions. Now What?

GBPUSD had a good run over the past six months, climbing from its 1.1412 March low to as high as 1.3483 last week. The pair is now back below 1.3000 after the latest portion of Brexit-related mess. Later in this article we will share our view of where the Pound is headed against the dollar,…

Read More »

USDTRY Set to Complete 12-Year Impulse Pattern

The U.S. dollar has been steadily climbing against the Turkish lira since 2008. Ten years later, in 2018, USDTRY reached 7.1500 on the back of geopolitical tensions and President Erdogan‘s reckless political decisions. In May 2019, however, the pair was down to 6.0600 and it looked like the Lira’s plunge might be finally over. Unfortunately,…

Read More »

EURUSD Up 420 Pips in a Month as Uptrend Resumes

The inevitable seems to be happening to the U.S. dollar. After record-breaking liquidity injections by the Fed in response to the COVID-19 crisis, the greenback is weakening across the board. The U.S. dollar has recently been declining against its major rivals, including the Yen, the pound and the euro. EURUSD, the most traded Forex pair…

Read More »

GBPJPY Bears Aiming at 120, Before Giving Up

Whether it is because of Brexit or not, GBPJPY has been trading below 160.00 ever since the referendum in June 2016. The pair has been locked in a wide range between 156 and 124 for four years now. Last week, it closed the session at 134.66, down from 138.84 at the open. In order to…

Read More »

Elliott Wave Setup Helps EURUSD Add 325 Pips

EURUSD has been under pressure for over two years now. The pair reached 1.2556 in February 2018, but has been making lower lows and lower highs ever since. Yet, the past couple of weeks painted a different picture. Between May 18th and May 29th, the euro surged 325 pips against the U.S. dollar. In those…

Read More »

EURGBP Pattern Signals Bullish Reversal Ahead

EURGBP has been in free fall since March 19th, when it rose to 0.9500. A month and a half later now, the pair is hovering below 0.8730, down 8% from the peak. Is the downtrend going to continue or should we expect a change of direction? That is the question we hope to answer in…

Read More »

GBPUSD Aiming at 1.30, but May Tumble to 1.21 First

Not long ago, we shared our long-term view of GBPUSD. In our opinion, the down-phase of the pair’s cycle, which is in its 13th year now, is almost over. One last dip to 1.1000 is likely to be followed by a major bearish reversal and the start of the next up-phase. Now, we are going…

Read More »

More analyses