Last week's development suggests that rebound from 1.2625 has likely completed with three waves up to 1.3486 already. More importantly, EUR/USD maintains a pattern of lower highs, lower lows since 1.4939 and such decline is still in progress. Initial bias is on the downside this week for 1.2974 support first. Break will affirm our bearish view and should target 1.2625 and below. On the upside, break of 1.3290 resistance is needed to signal completion of fall from 1.3486. Otherwise, we'll stay cautiously bearish even in case of recovery.

In the bigger picture, price actions from 1.6039 (2008 high) are treated as a long term consolidation pattern and there is no clear indication of completion yet. That is, price actions could remain corrective and relatively unpredictable. Current development suggest that the falling leg from 1.4939 is not finished yet and break of 1.2625 should pave the way to 1.1875 low. On the upside, we'd prefer to see sustained trading above 55 weeks EMA (now 1.3569) to indicate the start of another rising leg inside the pattern.

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. The range sounds a bit uselessly large but yes, it's that large. For long term traders, anywhere below 76.4% retracement of 1.1639 to 1.6039 at 1.2677 could be treated as a buy zone while above 23.6% retracement at 1.5001 is a sell zone, until there is clear indication of breakout.