EUR/USD Weekly Outlook

EUR/USD continued to be bounded in established range above 1.2706 last week as consolidation continued. While some more sideway trading might be seen, upside is expected to be limited by 1.3093. On the other hand, below 1.2706 will suggest that whole decline from 1.4719 is resuming for a retest of 1.2329 low next. However, note that a break above 1.3329 resistance will indicate that fall from 1.4719 has completed and bring strong rebound.

In the bigger picture, a medium term bottom in place at 1.2329. Whether such fall from 1.6038 to 1.2329 is impulsive or corrective in nature is debatable. But after all, with 1.4867 resistance intact, whole decline from 1.6038 is still expected to resume. Also, fall from 1.4719 is tentatively treated as resumption of such medium term down trend. Sustained break of 1.2329 will target 1.1639 medium term support next. On the other hand, above 1.3329 resistance will also shift favor to the case that consolidation from 1.2329 is still in progress with another rising leg just started for a retest of 1.4719 resistance.

In the long term picture, outlook is rather unclear for the moment. While 1.6038 is no doubt an important long term top, there is no clear answer on whether subsequent price actions from 1.6038 are unfolding as sideway consolidation, deep correction, or a reversal in trend. Nevertheless, note that another fall is still in favor as long as 1.4867 resistance holds and in such case, EUR/USD should at least have a test of 1.1639 long term support.

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