EUR/USD dropped further to as low as 1.2287 last week before forming a temporary low there and recovered. Initial bias is neutral this week for some consolidations. But upside of recovery should be limited by 1.2641 resistance, which is close to 38.2% retracement of 1.3283 to 1.2287 at 1.2667, and bring fall resumption. Below 1.2287 will target 100% projection of 1.4246 to 1.2625 from 1.3486 at 1.1865 which is close to 1.1875 low.

In the bigger picture, fall from 1.4939 is treated as a falling leg inside the consolidation pattern that started at 1.6039 (2008 high) and could now be heading to 1.1875 low and below. In that case, though, strong support is expected from 1.1639/1875 support zone to contain downside and bring rebound. After all, such consolidation would extend further inside range of 1.1639/6039 for some more time. On the upside, break of 1.3486 resistance is needed to indicate completion of fall from 1.4939. Otherwise, outlook will stay bearish even in case of strong rebound.

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.