EURUSD in a messy correction
EURUSD is in a corrective rally and continued to recover from the Brexit drop. Although the week closed higher than the open, the structure of the rally is pretty much corrective.
Short terms trades are next to impossible until there will be enough signs of a completed corrective structure. At the moment its not clear enough as to the time factor of the correction. Boundary lines of the structure seems to converge squeezing the price to a tight range.
In terms of Elliott waves the expectation is for the next impulse down as the 3rd wave of a higher degree and the C wave of an even higher degree. However it is much more complicated to conclude the structure of this possible 2nd wave. But its not worth the risk to pick tops at this moment. Specially after the massive Brexit move.
Major news events next week
ISM Non-Manufacturing PMI
FOMC Meeting Minutes
ADP Non-Farm Employment Change
Crude Oil Inventories
Average Hourly Earnings m/m
Non-Farm Employment Change
While there is no major news events from Europe next week, there is NFP on Friday. The last NFP reported only 38k, which was the lowest recorded for almost 6 years. So there is enough room for improvement in the NFP figure this month. Nevertheless, the fate of eurusd will primarily depend on the USD for the upcoming week.
So what this means is more bad news for EUR. Especially considering that the wave analysis of the Dollar index forecast a possible end of correction. So this could be the week that the bullish impulse starts for the Dollar – also creating pressure for the EUR to decline further down. Non-farm-payroll alone can move the market only for a brief period of time.
NFP note: It is NOT recommended to trade specifically on such events, unless you employ a sound strategy to minimize risk.
Completion of the Dollar index weekly flat correction
So the long term view is for the USD to appreciate and the EUR to decline further. So the EURUSD has more bearish potential.