EUR/USD Weekly Outlook

EUR/USD Weekly Outlook

EUR/USD dropped to as low as 1.2750 last week before forming a temporary low there and recovered. Some consolidation might be seen initially this week. But near term outlook stays bearish as long as 1.3048 minor resistance holds. Fall from 1.3710 is expected to resume sooner or later and below 1.2750 will target 1.2661 key support level next.

In the bigger picture, current development mixed up the outlook in EUR/USD with major question on whether rebound from 1.2042 has completed at 1.3710. Note that as long as 1.2661 support holds, such rebound could still extend above 1.3710 to 1.4939/5143 resistance holds. However, break of 1.2661 will confirm completion of such rebound. And more importantly, the corrective three wave structure will then indicate that deeper medium term weakness would be seen for a new low below 1.2042.

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. Another leg has started from 1.2042 and is in favor to extend back towards 1.5 level. Though, we'd monitor the development in the next few weeks to see if this leg has completed and whether the correction from 1.6039 would extend through 1.1639 support. .