EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3460; (P) 1.4014; (R1) 1.4327; More

EUR/USD's decline resumes and extends further in early US session. At this point, intraday bias remains on the downside as long as 1.3651 minor resistance holds. Break of 61.8% projection of 1.6038 to 1.3881 from 1.4867 at 1.3543. now encourages fall to next medium term fibonacci level of 61.8% retracement of 1.1639 to 1.6038 at 1.3319. On the upside, above 1.3651 will turn intraday outlook neutral first. But consolidation should be brief as long as 1.3907 resistance holds.

In the bigger picture, sustained trading below 1.3851 medium term support confirm that whole decline from 1.6038 has resumed. Next medium term target will be 61.8% retracement of 1.1639 to 1.6038 at 1.3319. So far, the strength of the fall from 1.6039 and the structure argues that it's something of a larger degree. The case of long term reversal is also building up. Nonetheless, note that EUR/USD is now at an important support zone with a) prior medium term high at 1.3668 (Dec 04 high); b) 38.2% retracement of 0.8223 (00 low) to 1.6038 at 1.3053 and c) 55 Months EMA at 1.3359. EUR/USD could at make a short term bottom between 1.30 and 1.36 stage a noticeable rebound before resuming the down trend. Hence, it's not advisable to chase decline when EUR/USD enters into this zone and profits on short positions could be taken if reversal signal occurs.

On the upside, a break above 1.4297 resistance will be the first alert term EUR/USD could have bottomed out in medium term term. Further break of 1.4867 resistance will confirm and bring larger scale consolidation before resuming the medium/long term down trend.

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