Futures traders in the foreign exchange market are currently making big moves to reposition themselves. They’re getting ready for next Consumer Price Index (CPI) data, which is creating dramatic swings. The EUR/USD currency pair, often a bellwether of sorts for the FX market, has experienced resistance in the 1.1780 to 1.1820 range. Traders have their eyes set on this resistance. The market is working through some very significant economic signals as we head into what is likely to be the final “normal trading” week of the year.
Some market analysts have begun using Elliott Wave Analysis to make sense of the ebb and flow of the EUR/USD pair. As things stand, current projections imply that wave (D) is likely to hit a roadblock at the recently found resistance area of 1.1780 to 1.1820. Should the pair break below an established parallel channel, it could signal the start of a fifth wave (E), marking deeper price corrections. As these two recent examples involving the pair show, that’s par for the course in such an environment, rife with weighty economic turmoil.
The US dollar is up recently after a downturn. Much of this rebound can be attributed to the movement of the US unemployment rate. The energy and pretense behind this rebound is that the dollar is strengthening. Traders are redirecting their wagers ahead of the Peters, as the CPI print will be key. Early resistance for the greenback comes in at 98.76, indicating a key level upward momentum may struggle to overcome.
The EUR/USD pair’s recent stabilization around the 1.15 area indicates a corrective phase, aligning with wave (C) of the Elliott Wave structure. This wave counts as possibly the B wave of a higher-degree complex fourth-wave triangle, depicting an extended correction since July. The overlapping decline seen in the last price actions corroborates this idea, as it highlights the chaotic nature of market corrections.
As market participants prepare for the upcoming economic data release, expectations regarding inflation metrics are already factored into current pricing. Such anticipations can lead to increased volatility and market movements as traders react to the actual data compared to forecasts.