EUR/USD

EUR/USD's rebound from 1.1825 ended earlier than we thought. After edging higher to 1.2091 last Monday EUR/USD quickly reversed on the same day and resumed the decline from 1.2322, pushed EUR/USD back to 1.18/19 region. From a bigger picture, daily MACD's turning downward is echoing our view that further weakness is to be seen. As discussed before, we'd expect further weakness towards 1.1639 low or further to 100% projection of 1.2322 to 1.1825 from 1.2091 at 1.1594. We'll maintain this short term bearish view as long as EUR/USD stays below falling trend line from 1.2322 to 1.2091 (now at 1.2061) or before any sign of reversal.

Zooming to the short term picture, Friday's rebound in late US session is making EUR/USD's outlook out-sync with other majors. EUR/USD dropped marginally below 1.1868 low but lack follow through selling to push it lower. From out point of view, it's 50/50 chance on whether the rebound from 1.1859 is the start of the final rising leg of consolidation pattern from 1.1868 or it's just merely a stronger than normal pull back for the fall to 1.1859.

We're prefer to take the assumption that as long as EUR/USD stays below 1.1927 minor resistance, we'd assume the rebound is just a rebound that's stronger than normal and fall should resume sooner rather than later towards mentioned downside target of cluster support of 1.1784/85 (with 78.6% retracement of 1.1639 to 1.2322 at 1.1785 and 61.8% projection of 1.2322 to 1.1825 from 1.2091 at 1.1784).

However, a push above 1.1927 will strongly suggest that the consolidation pattern from 1.1868 is still in progress with the rebound from 1.1859 as the final rising leg. Further rebound towards 1.1951 cluster resistance (38.2% retracement of 1.2091 to 1.1868 at 1.1953) should follow. But still, even in such case, upside should be limited below 61.8% retracement at 1.2006 and bring decline resumption.