Macro

The Week Ahead: USD Is Seen In Elliott  Corrective Recovery Ahead Of Some Important Economic EventsFeb 21, 2023

The USD is higher and keeps recovering since the strong US jobs data was reported for January and then also after worse-than-expected US CPI figures. Retail sales were also good for January so it seems that the fight against inflation is not done yet. Markets thinks that FED will have to be more aggressive, and some are even looking towards a 50bps increase on the next meeting. So it’s pretty simple; if economic data will keep coming out strong the dollar will be up, and stocks will be sideways or even bearish. So it’s very important to keep an eye on economic events and data. The next important numbers to watch will be PMIs today; it will be out for the UK, Europe and US.  AS well as  Existing Home sales later today, and then New Home sales for US on Friday.

Besides that there is FOMC meeting on Wednesday; a change in tone from Powell can shake the markets a lot. If he will be hawkish we know that dollar will be up with US yields. On the other hand, if he will stick to previous comments then this will be seen dovish, and USD will most likely turn south.

The Week Ahead: USD Is Seen In Elliott  Corrective Recovery Ahead Of Some Important Economic Events 
EURUSD 4H CHART
EURUSD 4H Chart

From Elliott wave perspective we see EURUSD in a higher degree correction after sharp turn down earlier this month, when price broke through the rising trendline support. Pair hit new lows then also at the end of last week,  but notice that the decline is not progressing at this stage, due to the holidays in the US. As such, we can see some slow down and choppy price action before the downtrend resumes, so ideally that’s still wave (B) now in progress. 1.08 remains an important resistance for a turn down into (C) wave.

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