EUR/USD’s late break of the 1.1660 resistance level suggests that a short-term bottom has already formed at 1.1575. More importantly, the drop from 1.1848 could have completed as a triple corrective wave. Initial bias is slightly to the upside this week with 1.1795 resistance first. For now, the risk will remain on the upside as long as the support at 1.1575 remains in the offing.
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 1.1542). 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.
