EUR/USD remains bound to consolidate above 1.1408 last week and the outlook is unchanged. Initial bias remains neutral this week first. Further decline is expected with cluster resistance at 1.1666 (38.2% retracement from 1.2081 to 1.1408 at 1.1665) remaining intact. On the downside, a strong break at 1.1408 would resume the decline from 1.2081 to a 38.2% retracement from 1.0176 to 1.2081 at 1.1353. However, a decisive break of 1.1666 would indicate that the decline from 1.2081 has been completed, returning the bias to the upside of the 61.8% retracement level from 1.2081 to 1.1408 at 1.1824.
In the bigger picture, a previous break of the 55 W EMA (now at 1.1501) should confirm rejection at the key 1.2 cluster resistance level. The entire uptrend from 0.9534 (2022 low) may have completed as a three-wave corrective rally as well. A deeper decline is expected to support the channel in the long term (now at 1.0535). Meanwhile, the risk will remain on the downside as long as the 1.2081 area holds, even in the event of a strong bounce.
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.
