Euro/U.S. dollar (EUR/USD) currency pair started to trade quite nicely to the upside, towards 1.110 area, after we recognized an ending diagonal in red wave c) of b. That said todays bullish action suggest that blue wave b is completed and that a five wave move in blue wave c may be unfolding. Ideally wave c will continue towards the 50 or 61.8 Fibonacci ratio, from where a new reversal lower may occur.
Aussie bounced nicely in the overnight session, clearly higher with a three wave move that can already be in late stages of a recovery. We need to keep in mind that previous decline from 0.7676 was made by five waves, which is a very important structure of a bearish trend, so we believe that current rally is going to be only temporary.
Surveys that suggested the UK economy may start to contract in quarterly terms after last month's Brexit vote dominated trade on major currency markets today, knocking almost 1% off sterling across the board.