EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.4192; (P) 1.4269; (R1) 1.4342; More

EUR/USD's recovery was limited at 1.4428 and recent decline resumes by taking out 1.4196 low, edging lower to 1.4165. Further decline is still expected to next cluster support at 1.3851 (50% retracement of 1.1639 to 1.6038 at 1.3839). However, above 1.4428 will indicate that a short term bottom is finally in place, possibly with bullish convergence condition in 4 hours MACD, and bring stronger rebound to 1.4908 resistance and above.

In the bigger picture, as mentioned before, the double top reversal pattern (1.6019, 1.6038) serves as an important signal of completion of medium term rise from 1.1639 (05 low). Last week's break of key support level of 1.4309, (38.2% retracement of 1.1639 (05 low) to 1.6038 at 1.4358, 61.8% retracement of 1.3262 to 1.6038 at 1.4322) and medium term trend line support (1.1825, 1.2483, now at 1.4408) further support this view. Weekly MACD turned negative too. Much deeper medium term fall is now expected to support zone of 1.1639 and 1.3668. On the upside, while some rebound could be seen, sustained break of double top neckline resistance at 1.5284 is needed before considering that decline from 1.6038 has completely finished. Otherwise, another fall is still expected even in case of strong rebound.

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