Nothing much happening on the EURUSD pair with the exception that bulls keep pushing against dynamic resistance. The pair has not made a significant move since August when it traded above 1.19. In the meantime, the one attempt above 1.20 was met with verbal intervention from the ECB.
After the US elections, the EURUSD followed the price action in the US stock market closely. However, it did so with a bit of a lag in the sense that most of the US indices are at new all-time highs, while the EURUSD is having troubles staying above 1.19.
Most likely, we will see similar price action heading into the ECB meeting. The central bank pre-committed to ease some more in December, but so did the Fed. Which one will make the decisive move for the EURUSD pair? In the end, will bulls win and send the pair above 1.20?
Inflation Continues to Fall
One thing is certain – the EURUSD traded in the last days with a bullish tone. On every single dip, it bounced.
However, today’s inflation data points to even lower inflation. Traders should not forget that the ECB’s mandate has an inflationary framework centered around 2%. Only that today’s data shows the monthly decline of -0.3% and the core at 0.2%.
For the ECB, the core inflation matters the most. This is the one that should go below, but close to 2%. So far, it threatens to drop below zero, and the ECB is pressured to act this year.
EURUSD Elliott Waves Count
From an Elliott Waves point of view, the market appears to be in a leg of a contracting triangle. If that is correct, the move lower should be corrective, most likely an elongated flat.
Providing the EURUSD will not make a new high above the 1.20 level, the idea is that bears should remain short with a stop at the highs and targeting a much lower EURUSD in the near future.
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EURUSD Price Forecast
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