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The EU economy has proven to deliver a growth of 0.2% Q/Q in Q3. Although this looks somewhat optimistic but the small growth in Q3 still paints the same bigger picture which is that growth has slowed down and a recession is still in play. One of the main examples from national survey indicators show that manufacturing has been under extreme pressure due to the higher energy cost crisis.
To be precise, services, manufacturing and composite PMI are still hovering below 50 as per the most recent data which was released in October 2022.
Therefore, despite some hopeful news on the short-term energy supply front, the euro area economy will face a range of gloomy days. A recession is still certain – the only question is how bad it will be.
This goes onto my next point which indicates that the EURO just had its last hurray prior to the recession continues to bite the EURUSD.
EURUSD Daily Chart – November 7th 2022
Chart prepared on TradingView by Zorrays Junaid
Considering that EURUSD has been in a bearish trend since January 2022. So, it is safe to conclude that a further continuation to the downside is on the cards.
There are two alternatives that may occur in the near-term future. Either the price will continue to correct into the upper bound of the ascending channel or a break of 0.97301 key level to support the overall may occur without any further pullback.
In terms of Elliott Wave, this would be considered as wave 5. Wave 5 is the final wave of an impulsive wave cycle. This raises the question that whether if EURUSD is in for a rotation after one lower low.
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