Much volatility was seen in EUR/USD last week but the development didn't change in overall outlook. A short term bottom is at least formed at 1.2042 and further rally is expected. Break of 1.2404 resistance will turn bias back to the upside for 1.2747 (50% retracement of 1.3486 to 1.2042 at 1.2764) key resistance level next.

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). Bullish convergence condition in daily MACD raises the possibility of reversal. But we'd prefer to see sustained break of 1.2747/2764 resistance zone to give us more confidence. In such case, stronger rise should be seen to 1.3486 resistance for confirmation. But before that, another decline could still be seen to 1.1875 and below.

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. 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. That this, it's time for long term traders to liquidate EUR/USD shorts and start building up long positions for medium term rebound.

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