EUR/USD rose further to 1.3837 last week but faced some resistance ahead of 1.3860 and retreated. A temporary top is at least formed and initial bias is neutral this week. As noted before, we're favoring the case that consolidations from 1.3860 is not over yet. That is, rise from 1.3427 is possibly the second leg of the consolidation. Hence, even in case of another rise, the pair would face strong resistance at 1.3860 and bring another fall. Below 1.3704 minor support will flip bias back to the downside for 1.3427 as the third leg consolidations. But after all, outlook in EUR/USD will remain cautiously bullish with 1.3253 cluster support (61.8% retracement of 1.2873 to 1.3860 at 1.3250) intact. Rise from 1.2873 is still expected to resume sooner or later. Meanwhile, decisive break of 1.3860 will confirm that rise from 1.2873 has resumed and should target 1.4281 high next.

In the bigger picture, main question remains on whether medium term correction from 1.6039 has finished with three waves down to 1.1875. The firm break above 1.35 psychological level again affirm the case that fall from 1.4281 was merely a correction only and whole rise from 1.1875 is still in progress. Also, note that break of 1.4281 will revive the case that medium term correction from 1.6039 was completed with three waves down to 1.1875 and the long term up trend might be resuming. On the downside, though, below 1.2873 will turn focus back to 1.1875 low.

In the long term picture, considering the five wave impulsive structure of the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, firstly, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 to contain downside. Secondly, we'd expect another high above 1.6039 eventually, after correction from 1.6039 is confirmed to be finished.

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