A critical event next week will be the FOMC meeting. Analysts at MUFG Bank consider that Jerome Powell will focus on the labor market rather than economic growth. Expect to hear much less about GDP from Powell next week and a lot more about COVID-related job losses. 9.21mn jobs need to be refilled to get back to the pre-COVID employment peak in Feb 2020.
So we should observe from a fundamental perspective how Powell's statement will affect the market.
From a technical standpoint, we were expecting DXY to reach 93.50 with wave Y, and because it managed to break the 100% Fibonacci extension we were expecting it to reach the 161.8% Fibonacci level, before finishing its correction and continue its way down for more lows; however, DXY reached the 127.2% Fibonacci Extension level and retraced back down showing weakness signs.
If the DXY has really finished its correction, we will start seeing all major currencies go back up again. Looking at the EUR/USD on the daily chart, you can see that AB=CD (reached the 100% Fibonacci extension level), so there is a very high possibility that EUR/USD finished its corrective wave 4 and it could be finally the time that we see all major currencies reach new highs. Our first target for wave 5 is the weekly resistance around the 1.24500 zone. Breaking it will push EUR/USD for new highs towards 1.27000 and 1.28000 and possibly 1.30000.
So we should observe from a fundamental perspective how Powell's statement will affect the market.
From a technical standpoint, we were expecting DXY to reach 93.50 with wave Y, and because it managed to break the 100% Fibonacci extension we were expecting it to reach the 161.8% Fibonacci level, before finishing its correction and continue its way down for more lows; however, DXY reached the 127.2% Fibonacci Extension level and retraced back down showing weakness signs.
If the DXY has really finished its correction, we will start seeing all major currencies go back up again. Looking at the EUR/USD on the daily chart, you can see that AB=CD (reached the 100% Fibonacci extension level), so there is a very high possibility that EUR/USD finished its corrective wave 4 and it could be finally the time that we see all major currencies reach new highs. Our first target for wave 5 is the weekly resistance around the 1.24500 zone. Breaking it will push EUR/USD for new highs towards 1.27000 and 1.28000 and possibly 1.30000.