EUR/USD Weekly Outlook

EUR/USD's rebound was limited at 1.4196 last week and weakened sharply since then. Note that momentum of the rebound from 1.3747 was so far quite unconvincing. The structure of such rise also looks corrective. Hence, while 1.3747 support still holds, we're cautiously preferring the case that it's already completed at 1.4196. Therefore, initial bias is mildly on the downside this week for a retest of 1.3747 low first. Break will confirm that whole decline from 1.4337 has resumed and should then target medium term channel support (now at 1.3513). On the upside, though, 1.4082 will turn intraday outlook neutral first and argue that consolidation from 1.3747 is still in progress. But we'd continue to favor that it's a correction and expect upside to be limited below 1.4337 high.

In the bigger picture, as mentioned before rise from 1.2456 is treated as the third leg of medium term triangle consolidation from 1.2329 (first leg completed at 1.4719, second at 1.2456). With daily MACD staying below signal line, it's likely that such rise has completed at 1.4337 already. Break of 1.3747 will add more credence to this case and firm break of channel support (now at 1.3513) will confirm and bring deeper fall to 1.2456/2884 support zone. Though, in such case, as we're favoring that it's developing into triangle consolidation, downside should be contained by 1.2456/2884 support zone and bring one more rise to complete the consolidation.

On the upside, above 1.4337 will delay the bearish case and indicate that rise from 1.2456 is still in progress. Nevertheless, as this rise is still treated as part of the medium term consolidation, it should be limited by 1.4719/4867 resistance zone. Hence, upside potential should be limited and focus will still be on reversal signal even in case of another rise.

In the long term picture, as we're favoring the case that price actions from 1.2329 are merely consolidation in the larger down trend, the fall from 1.6039, therefore, is expected to resume after completing the consolidation. Below 1.2329 will confirm that such down trend has resumed for at least a test on 1.1639 key long term support. We'll hold on to this long term bearish view as long as 1.4867 resistance holds .

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