EUR/USD dropped further to 1.3421 last week before forming a temporary low there and recovered. Initial bias remains neutral this week and some more consolidations could be seen. But fall from 1.4246 will remain in favor to continue as long as 1.3794 minor resistance holds. Below 1.3421 will extend the fall to retest 1.3145 support. Though, above 1.3794 will suggest that pull back from 1.4246 is completed and will flip bias back to the upside for retesting this resistance.

In the bigger picture, EUR/USD is still bounded in the consolidation from from 1.6039. However, medium term outlook is a bit mixed for the moment as it's uncertain whether rise from 2010 low, which is one leg of the consolidation, is finished at 1.4939 or not. We'll stay neutral fall. In any case, the next move, up or down, will still be part of the consolidation pattern. Above 1.4939 will target 1.5143 and above but strong resistance should be seen below 1.6039 high to bring reversal. Below 1.3145 will target 1.1875 and possibly below.

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.

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