Rising from the Ashes: EURO's Path to RecoveryGood day traders,
Trust we all profited from the FOMC report of yesterday.
Please take a moment to go through my outlook and expectation on Euro in the coming weeks into the new year.
Overview
EUR/USD appears to be rebounding after a sharp decline triggered by yesterday's FOMC report, where the FED delivered a hawkish 25bps cut, which drove higher market-driven borrowing costs, a stronger dollar and a sharp drop in stocks. From the start of the week EURUSD had previously been consolidating, during which weak buyers (traders) were caught off guard by a false breakout to the upside, reaching a weekly high of 1.05342 on Tuesday.
Idea
The subsequent sell-off drove the pair to a four-week low of 1.03439, just above the November 22nd low of 1.03324. This drop aligns with a key Fibonacci reversal pattern under Elliott Wave theory, suggesting the potential for a significant rally. If this pattern holds, EUR/USD could gain approximately 400 pips (1.08150) in the coming weeks, with the recovery likely extending into the new year.
Conclusion
The recent low is expected to act as a firm support level, and a breach of the November low appears unlikely. This anticipated rally could mark the beginning of a period of recovery and optimism for the euro.
Cheers! Merry Christmas and Happy New Year in advance.
