Global macro overview for 19/01/2018

The political turmoil in Germany is doing its best. On Sunday there will be a congress of the German SPD party, on which there are big chances to reject the idea of forming the Great Coalition with Angela Merkel's CDU party. In this case, Germany may wait for repeated elections or the CDU will decide on a minority government, which, however, Merkel does not want. For EUR, as for USD, the result of political scuffles can be positive or negative. However, how much political stability in Germany is an important factor building the strength of the EUR? It is certainly losing on importance with market expectations for the hawkish ECB comeback next Thursday, but during the period of deadly anticipation of the statement after the meeting, the SPD's rejection of the coalition may easily turn into a reason to push the Euro off. For now, however, it remains in a waiting mode until Monday.

Let's now take a look at the EUR/USD technical picture at the H4 time frame from the Elliott Wave point of view. The top of the wave (iii) is already in place at the level of 1.2321 and now the market has entered a corrective cycle wave (iv). The first three waves to the downside are done and the price has hit 38% Fibo (minimal requirements are met), but there is still a chance for a more complex and time-consuming corrective pattern is a form of a triangle. The next support is seen at the level of 1.2166 and the next resistance at the level of 1.2321.

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