EUR/USD's rally attempt was limited at 1.4548 last week and reversed. The development suggests that rise from 1.3837 has completed. More importantly, whole consolidation pattern from 1.4939 high is still in progress and another falling leg had just started from 1.4548. Initial bias is mildly on the downside this week for 1.4054 first. Break will target 1.3837 support next. On the upside, above 1.4315 minor resistance will turn bias neutral and bring recovery. But upside should be limited below 1.4548 and bring another fall.

In the bigger picture, price actions from 1.4939 is clearly corrective looking and that suggests whole rally from 1.1875 (2010 low) is still in progress. We'll stay cautiously bullish in EUR/USD as long as 1.3837 support holds and expect rise from 1.1875 to resume eventually to retest 1.6039 high. However, considering that weekly MACD has been staying below signal line for some time now, a break below 1.3837 will have the trend line support, as well as 55 weeks EMA firmly taken out. That would argue that the rally from 1.1875 has indeed finished and will bring deeper fall towards 1.2873 support and possibly below.

In the long term picture, while the set of three waves from 1.6039 to 1.1875 should mark the completion of a pattern, the rally from 1.1875 is so far unconvincing as an impulsive wave. That is, price actions of 1.6039 could indeed be developing into a prolonged sideway pattern with rise from 1.1875 as the second wave. Hence, even in case of further rally, we'll start to look for reversal signal ahead of 1.6039.

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