EUR/USD recovered to 1.1172 last week but reversed and dropped sharply from there. The development suggests that a head and shoulder top could be formed (ls: 1.1199, h: 1.1239, rs: 1.1172. Focus is now on 1.1085 support this week. Break there will argue that whole corrective rise from 1.0879 has completed. In this case, intraday bias will be turned to the downside for 1.0981 support for confirmation. On the upside, above 1.1172 will turn bias to the upside for 1.1239 instead.
In the bigger picture, rebound from 1.0879 is seen as a corrective move at this point. In case of another rise, upside should be limited by 38.2% retracement of 1.2555 to 1.0879 at 1.1519. And, down trend from 1.2555 (2018 high) would resume at a later stage. However, sustained break of 1.1519 will dampen this bearish view and bring stronger rise to 61.8% retracement at 1.1915 next.
In the long term picture, outlook remains bearish for now. EUR/USD is held below decade long trend line that started from 1.6039 (2008 high). It was also rejected by 38.2% retracement of 1.6039 to 1.0339 at 1.2516 before. A break of 1.0039 low will remain in favor as long as 55 month EMA (now at 1.1538) holds.
