EUR/USD dropped further to as low as 1.3212 last week and the development suggests that decline from 1.4246 is possibly resuming recent fall from 1.4939. Initial bias remains on the downside for 1.3145 support first. Break will confirm this bearish case and target 100% projection of 1.4548 to 1.3145 from 1.4246 at 1.2843 next. On the upside, above 1.3229 minor resistance will turn bias neutral first. But recovery should be limited by 1.3421/3614 resistance zone and bring another fall.

In the bigger picture, no change in the view that price actions from 1.6039 high are consolidation pattern and is still in progress. Current development now shifts favor back to the case that fall from 1.4939 represents another falling leg inside such consolidation pattern. Break of 1.3145 support will affirm this case and should target 1.1875 and below. Nonetheless, in that case, we'd expect strong support above 1.1639 key level to contain downside. On the upside, above 1.4246 will indicate that fall from 1.4939 is finished will extend the rally from 1.1875. But then, strong resistance should be seen below 1.6039 to limit upside.

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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