EUR/USD Elliott Wave outlook

March 20, 2014 06:57 AM

The U.S. Dollar Index is on the move since yesterday when the FED said it would reduce its monthly bond purchases by an additional $10 billion to $55 billion. The U.S. Dollar Index also recovered on hints from Fed Chair Janet Yellen that the bank could begin to raise interest rates sooner than anticipated.

Gold is moving down, the S&P 500 is falling as well, and USD is up against all other major currencies. Our focus today and tomorrow will be on EUR/USD. A decline from 1.3966 March high is in three legs, and now we need to have to wait on important evidences, either to confirm a corrective retracement which would allow us to look for longs once the market bottoms or we wait more signs for a bearish impulse as this one is also one of the possibility.

However, for a bearish case we would need to see further impulsive weakness down 1.3700/40, to make sure it’s an extended wave (iii).

The bearish count has my special attention because of the S&P 500 that can revisit 1820 level from last week. EUR/USD and S&P 500 has positive correlation now. In fact EUR/USD is even weaker than the S&P 500 so if S&P 500 will fall down, which is expected then Euro may lose even more value against the USD.  



EURUSD vs. S&P 1-hr.

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