EUR/USD edged higher to 1.2181 last week but retreated. Though, downside was contained well above 1.1985 support. Initial bias remains neutral this week first and further rally is expected. On the upside, break of 1.2181 will resume the rise from 1.1703 to 1.2242/2348 resistance zone. Decisive break there will resume larger up trend for 1.2555 key resistance zone next.
In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1602 support holds. Reaction from 1.2555 should reveal underlying long term momentum in the pair.
In the long term picture, the case of long term bullish reversal continues to build up, with bullish convergence condition in monthly MACD, sustained trading above 55 month EMA and long trend falling trend line. Focus is now on 1.2555 cluster resistance (38.2% retracement of 1.6039 to 1.0339 at 1.2516 ). Decisive break there will confirm and target 61.8% retracement at 1.3862 and above.