The extended recovery of EUR/USD last week suggests that the correction from 1.2081 has already been completed at 1.1408. Initial bias remains on the upside this week for the 61.8% retracement from 1.2081 to 1.1408 at 1.1824. A decisive break there will pave the way for a retest of the 1.2081 high. On the downside, minor support at 1.1642 will shift the intraday bias back to neutral first.
In the bigger picture, strong support from the 38.2% retracement level from 1.0176 to 1.2081 at 1.1353 suggests that a pullback from 1.2081 is likely a corrective move. Strong support was also found at the 55 W EMA (now at 1.1505). Focus is back on the key cluster resistance level 1.2. A decisive breakout there would have long-term bullish implications. However, breaking the support 1.1408 will revive the bearish trend reversal in the medium term.
In the long-term picture, the 38.2% retracement from 1.6039 to 0.9534 at 1.2019, which is close to the psychological level of 1.2000 is key to the outlook. Rejection at this level would keep the multi-decade downtrend from 1.6039 (2008 high) intact, and keep the outlook neutral at best. However, a decisive break of 1.2000/19 would signal a reversal of the long-term upside trend, targeting the 61.8% retracement levels at 1.3554.
