EUR/USD dropped sharply to as low as 1.3608 last week but formed a temporary low there and recovered. Initial bias is neutral this week for some sideway trading. On the downside, below 1.3608 will indicate that fall from 1.4246 has resumed. Also, this will reaffirm the case that rebound from 1.3145 is completed at 1.4246, just ahead of 61.8% retracement of 1.4939 to 1.3145 at 1.4254. In such case, deeper fall should be seen to 1.3145 low first On the upside, though, above 1.3871 will flip bias back to the upside for a test on 1.4246 resistance instead.
In the bigger picture, recent volatility in EUR/USD is mixing up the outlook again. But firstly, consolidation from 1.6039 is still in progress. Secondly, as long as 1.3145 support holds, rise from 1.1875, which is a leg inside the consolidation pattern, is still in progress. Break of 1.4939 will resume such rally. But even in that case, we'd watch for reversal signal as EUR/USD enters into 1.5143/6039 resistance zone, and anticipate a reversal there to bring another medium term decline to continue the consolidation from 1.6039. On the downside, break of 1.3145 will in turn shift favor back to the case that another falling leg is already started at 1.4939 and would target 1.1875 support next.
In the long term picture, EUR/USD turned into a long term consolidation pattern since reaching 1.6039 in 2008. Such consolidation is still in progress and we'd expect range trading to continue for some time between 1.1639 and 1.6039.