EUR/USD Elliot Wave Technicals and the ECB

ECB April Meeting Expectations

  • April ECB meeting will be the highlight of the week for EUR/USD.
  • ECB President Christian Lagarde compared the Eurozone economy with a patient on two crutches.
  • The two crutches of course being the fiscal and monetary policy.
  • Given the rise in cases, new lockdowns and emergence of new variants, the crutches are not expected to be going away anytime soon.
  • Market participants continue to expect this week’s policy announcement to be skewed towards the dovish end.
  • However, it is the degree of dovishness that will determine the near term outlook for EUR/USD.
  • As per Goldman Sachs, the ECB has scaled its bond purchasing to €19bn, comparing to €15bn earlier in 2021.
  • EURO area vaccination programme is also expected to accelerate as Pfizer will now deliver additional 50 million vaccines during the second quarter.

EUR/USD Elliott Wave Outlook

US-Japan 10Y Yield

US-Japan 10Y Yield (Source:Trading Economics)

  • Price is seen rallying in 5 waves from the $1.06 low registered in march 2021, as the US dollar skyrocketed following the safe haven demand, pushing EURO lower.
  • However, EURO has staged an impressive recovery as the US Dollar sold off in the aftermath of FED rate cuts.

EUR/USD Short-Term EW Outlook

US-Japan 10Y Yield

US-Japan 10Y Yield (Source:Trading Economics)

  • The recent decline in EUR/USD from the $1.2350 area reached earlier this year is seen as a double correction.
  • A double Elliott Wave correction consists of two A-B-C zigzags separated by a three wave intermediate correction (X).
  • This double correction has marked the end of a larger wave 4.
  • It is worth noting the price registered the recent bottom at the $1.1700 area, which is the 38.2% Fibonacci retracement of the 1.0798-1.2350 area.

Elliott Wave Double Zigzag

US-Japan 10Y Yield

US-Japan 10Y Yield (Source:Trading Economics)

EUR/USD Technical Outlook

US-Japan 10Y Yield

US-Japan 10Y Yield (Source:Trading Economics)

  • EUR/USD short-term momentum continues to pick as the price initiates a sequence of higher-highs and higher-lows.
  • H4 SMAs 20 and 50 have now crossed the 100 and 200 SMAs from below and continue to rally,
  • Momentum oscillators are consolidating recent gains as the market looks for a catalyst for the next move higher.
  • Sources: Financial Times, www.elliottwave.net