EUR/USD dipped to 1.2954 last week but downside momentum was unconvincing and fall from 1.3201 looks corrective. It's unclear whether rebound from 1.2746 is completed. Initial bias is neutral first. Below 1.2954 will turn bias to the downside for retesting 1.2746. Meanwhile, above 1.3128 will likely bring stronger rally to 61.8% retracement of 1.3710 to 1.2746 at 1.3342.
In the bigger picture, current development mixed up the outlook in EUR/USD with major question on whether rebound from 1.2042 has completed at 1.3710. Note that as long as 1.2661 support holds, such rebound could still extend above 1.3710 to 1.4939/5143 resistance holds. However, break of 1.2661 will confirm completion of such rebound. And more importantly, the corrective three wave structure will then indicate that deeper medium term weakness would be seen for a new low below 1.2042.
In the long term picture, EUR/USD turned into a long term consolidation pattern since reaching 1.6039 in 2008. Such consolidation is still in progress and we'd expect range trading to continue for some time between 1.1639 and 1.6039. Another leg has started from 1.2042 and is in favor to extend back towards 1.5 level. Though, we'd monitor the development in the next few weeks to see if this leg has completed and whether the correction from 1.6039 would extend through 1.1639 support. .
IMOH, Clement I.
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