EUR/USD (FOREX:EURUSD) found support on Friday after the nonfarm payrolls report around 1.3100 area, from which we have seen a more than 80-pip rally back to the wave 2-wave 4 trendline. Usually when this occurs it means that a five wave decline is complete and that the market reversed into a temporary correction. As such, we are now tracking an A-B-C retracement back to 1.3225-1.3250 region before we may turn bearish again. In that zone, we can also see a former wave four that may react as a reversal level and cause a new sell-off for the pair.
EUR/USD 4h Elliott Wave Analysis
Meanwhile, we also are tracking GBP/USD (FOREX:GBPUSD), which is stronger than EUR/USD lately, but it also has a bearish wave structure. Rally from March low on GBP/USD is a complex pattern most likely a flat in wave 2 where we may see test of 1.5750 this week after recent bounce from the lower side of a current upward channel. However, this new high will be just a final leg, fifth wave within wave (C), so larger bearish trend remains in view but GBP/USD just needs more time to turn down when compared to EUR/USD, but we think that sooner or later pound will also turn south and catch the euro weakness.
GBPUSD Daily Elliott Wave Analysis