While EUR/USD recovered to 1.3538 last week, no follow through buying was seen and the pair formed there and retreated. With 1.3614 resistance intact, there is no confirmation of near term reversal. Initial bias is neutral this week with focus on 1.3259 minor support. Break there will resume the decline from 1.4246 though 1.3212 support o retest 1.3145 first. A break above 1.3538 will turn focus back to 1.3614 instead.

In the bigger picture, no change in the view that price actions from 1.6039 high are consolidation pattern and is still in progress. Consider that EUR/USD is trading below falling 55 days EMA as well as 55 weeks EMA. Daily and Weekly MACE are both negative. Favor is on the case that decline 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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