[EN] Analysis: EURO May Bounce Back

EURO can recover a lot as hiking cylce by CB can be approaching to the end. Over the past few years, the EUR has experienced a sharp decline against the USD, which has been a bearish trend that accelerated through the first part of 2021, with the EUR/USD rate falling below parity and even reaching 0.96 at some point.

The reason for this strong drop last year was the FOMC’s hawkish policy, which is typically the first bank to make big shifts in policy. It’s no surprise that investors and speculators turned bullish on the USD as the Fed hiked rates quickly from 0 to 5%. While other central banks were lagging, they eventually started to act with a delay.

However, the FED hinted that the hawkish policy could be approaching a pause, and that’s when many currencies, including the EUR, turned up significantly to 1.1 at the start of 2023.

We see this recovery as a reversal pattern, as it is a sharp and strong move, called an impulse in Elliott wave terms. Such price action typically indicates that the market is bottoming and that times are changing. From that perspective, it can be an interesting resumption of this new recovery after a correction – an A-B-C retracement. Comparing real-time data with the “basic structure,” we can see that most likely, the EUR/USD pair is currently in a corrective phase. Therefore, we believe that the recovery can resume after this pullback is completed.

What is impulse wave?
A five-wave pattern that moves in the same direction as the trend of one larger degree.

Rules:
– Wave 2 should not break below the beginning of Wave 1.
– Wave 3 should not be the shortest wave among Wave 1, 3 and 5.
– Wave 4 should not overlap with Wave