Despite dipping to 1.2994 initial, EUR/USD drew strong support from 1.3 psychological level and rebounded. Subsequent break of 1.3212 indicates that fall from 1.3385 is finished. More importantly, current development argues that price actions from 1.3486 are merely a consolidation pattern and has completed with three waves down to 1.2994. initial bias is mildly on the upside this week for 1.3385 resistance first. Break there will affirm this bullish case and indicate that whole rebound from 1.2625 is resuming. In such case, EUR/USD will target 100% projection of 1.2625 to 1.3486 from 1.2994 at 1.3855. On the downside, though, below 1.3128 minor support will turn focus back to 1.2994 support instead.
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 is slightly favoring the case that fall from 1.4939 is finished at 1.2625 and another rising leg inside the pattern is starting. Sustained trading above 55 weeks EMA (now at 1.3492 should confirm and pave the way towards 1.5 psychological level. After all, we'd prefer to see decisive break of 1.5143 resistance before considering completion of the consolidation pattern from 1.6039. Otherwise, we'd expect range trading to continue.
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.