Elliott Wave Analysis if the EUR/USD Currency Pair by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.
The upside breakout in the Euro after the news release just now from the EU summit brings this potential wave count to mind, where the Euro may be in a wave 3 green within wave c pink. The Fibonacci (1.414) and equality (1.442) targets for the end of the potential impulse are shown on the chart. If this wave count is correct, and we should know in a few hours, it would likely prop up equities in the short term. My main wave count for the S&P continues to expect a slight new high tomorrow, followed by solid selling, so this new potential count for the Euro and my main expectation for the S&P are currently at odds. The dichotomy will require a few hours to clear up.
Frankly, from a fundamental perspective, the news from the EU should be causing the Euro to tank, because, in effect, the EU is finally playing catch-up with the US (and others) in the desperate and eventually futile race between nations to debase currencies as an alternative method of reducing debt. The other alternatives are 1) steep growth, (which doesn’t seem likely), and 2) default, (which seems almost inevitable for many). Part of the “solution” the EU is likely counting on is that a portion of their recent actions will cause the Euro to go down, so yesteryear’s creditors can be paid with less valuable Euros. In the end, every country that can, will debase, and the inevitable end result of numerous defaults will not have been thwarted in the least. Ultimately, heightened political tensions around the world will be the net outcome.
I still believe that from both a technical and fundamental standpoint, the Euro is most likely to fall in value vs. the US Dollar, and sooner than later. If the depiction on the chart is correct, the Euro is due to turn on either Friday October 28, or by Wednesday November 2 on the outside.
Note added the next morning: This has become my main wave count. Wave 3 green powered higher in impulsive fashion overnight, and hit the first target of 1.414 already. 1.442 is the next target, where wave “c” pink will equal wave “a” pink, a very common relationship in zigzags. Invalidation is at 1.45487.