Related Topics

A "Novel" Shift Caused the Euro's Near-term Rally -- But Not the One You May Think

The ECB adopts a hawkish tone... after the EURUSD's uptrend was already underway

by Nico Isaac
Updated: September 03, 2021

On September 3, the world's most popular currency pair, the Euro/US Dollar, took center stage. That day, the euro soared to its highest level against the greenback in one month.

Before you could blink, mainstream experts identified the main cause for the EURUSD rally: News stories on September 1st and 2nd confirmed that Eurozone inflation just reached 3%, a decade peak. In turn this prompted certain high-ranking members of the European Central Bank to suggest the dovish policies of bond-buying and indefinite stimulus may be migrating south for the winter.

And in its place, a certain bird with sharp claws and thirst for rate-rising blood will return. Here, these September 1-2 headlines go on hawk-watch:

  • "Euro Stays Strong Ahead of Euro Area Inflation Reports" (Sept. 1 Yahoo Finance)
  • "Inflation Shock & ECB Hawks Keep Euro Near 1-Month High" (Sept. 2 Reuters)
  • "Euro Near 1-month Peak versus the Dollar, Supported by ECB Hawks" (Sept. 2 Nasdaq)

A September 1 FX Street added:

"Eurozone inflation is rising and European Central Bank hawks are taking notice. Higher inflation has reached the old continent and prompted both Klaas Knot and Robert Holzmann of the ECB to suggest the bank should reduce its bond-buying spree.

"A hawkish shift in ECB policy is now in play and that is a novelty."

Again, this "hawkish shift" in ECB's tone came on September 1-2.

Yet -- the EURUSD rally began well before then. To be precise, the pair's recent low was on August 20. In turn, the mainstream effort to pin the rally on the ECB's new hawkish language doesn't add up.

By contrast, one day before the EURUSD's actual low, our August 19 Currency Pro Service posted this intraday update on the pair which alerted traders to the end of the euro's decline and start of a significant rally. There, our analysts presented the following chart and said:

"We are going into the US session presented with an interesting scenario...

"Starting soon from little if any under 1.1666 favor price staging an initial five wave rally sequence to above 1.1804, and likely representing the first leg up of a perceived much larger advance."

European Euro-US Dollar - 6 hour Aug 2021

And this next chart captures the full extent of the move that followed:

European Euro-US Dollar - 4 hour Sep 2021

Currency market trends can change on a dime, yet you don't have to miss the signs of an imminent turn.

Get in front of near- and long-term shifts in the world's leading forex pairs with our trader-focused Currency Pro Service.

What's Next in Forex? It Isn't One Opportunity... It's Many

The What: Intraday, daily, and weekly analysis of currency markets, including labeled charts and critical price levels to help minimize risk.

The Who: Leading forex pairs from the Euro/Dollar to Aussie Dollar/Yen

The How: Our trader-procured Currency Pro Service. See below for subscriber details

4 ways EWI's Forex Pro Service lets you trade with more confidence

If it's an important pair, you'll be on top of it

1. You Get Around the Clock Analysis for 11 Popular FX Pairs

Your Currency Pro Service subscription puts a team of Forex experts in your corner. Their goal is to make sure that day-by-day, hour-by-hour, you have the very latest Elliott wave forecasts for the FX markets that matter most -- whether you need it at 2am or 2pm. This intensive coverage includes 11 of the most popular dollar and cross rates:


2. You Get "Opportunity-Now!" Alerts

Your Pro Services Forex team scours the FX markets for dramatic set ups for you. Each is a market that has reached a low-risk, high-reward juncture in its wave pattern. You'll find them in the Opportunities section of your Pro Service portal.

3. You Get Essential Weekly Perspective

Once a week, your Forex analysts record a video to help you prepare for the week ahead. Sit back and watch as our analysts reveal the markets that are on their radar and that should be on yours. Then, each week market veteran Murray Gunn posts his Currency Insights column calling your attention to an over-looked but powerful wave-generated undercurrent moving the money markets. These videos and columns add up to unparalleled, essential perspective for all serious FX traders.

4. You Become Part of an Exclusive Community of Savvy Elliott Wave Traders

Our Forex team is your Forex team. If you have a question about the Wave Principle or our analysis, just send us an email. We'll update the next post or video so you and your fellow subscribers get the clarity you need.

Or, if you're having a hard time grasping an Elliott wave concept, often we can suggest a resource for you to read or watch.

We know we're successful when you understand the Wave Principle and our analysis. We'll do what we can to make sure that happens.

Note that we do not provide individualized services, assistance or advice concerning investing or trading in any way.

Start Your Subscription Now

Personlize your FX Pro Service package to get the coverage you need. You pay only for the markets and timeframes you order, and the more you select, the less you pay for each one. Try our selection tool to see how it works.

Will These 2 Sectors Lead the Stock Market Lower?

The S&P 500 index has been in a narrow trading range for several months. Of course, it remains to be seen where the next decisive price move will take the stock market. If it's to the downside, these sectors look like prime candidates as bear-market leaders.

Lockheed's (LMT) "Waterfall Decline" from Record Highs Fits Elliott Wave "Form" to a T

On April 18, aerospace/military defense giant and Big Board listee Lockheed Martin (LMT) soared to its highest level in its 28-year history. Where "fundamental" analysis was shapeless, Elliott wave analysis saw the stock's current form, and its price future.


Forget the Fed -- Watch the Waves

The Federal Reserve, and to a lesser degree the European Central Bank, have dominated the conversation about interest rates lately. But watch our Interest Rates Pro Service analyst Ivo Zhelev apply textbook Elliott waves to forecast the price of the UK's Long Gilt -- and, by extension, UK interest rates -- without a single glance at central bank statements.