EUR/USD's recovery attempt was limited by 4 hours 55 EMA and recent decline extended to as low as 1.2630 last week. Initial bias remains on the downside this week and current fall should target 100% projection of 1.4939 to 1.3145 from 1.4246 at 1.2452 next. On the upside, break of 1.2878 resistance is needed to signal short term bottoming. Otherwise, near term outlook will remain bearish even in case of recovery.
In the bigger picture, price actions from 1.6039 are unfolding as a consolidation pattern in the long term and is still in progress. Fall from 1.4939 is a falling leg inside the pattern. It's hard to anticipate the length of a leg of any complex corrective pattern. The first line of defense would be on the above mentioned 1.2452 projection level. Strong break of this level would then likely send EUR/USD through 1.2 psychological level to 1.1875 and below. Meanwhile, we'd prefer to see sustained break of 1.3145 support turned resistance before considering near term reversal.
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.