The EUR/USD pair experienced a decline last week, falling from 1.1213 to 1.0760 before showing signs of a temporary recovery. As we look ahead to this week, the initial bias is neutral, suggesting a period of consolidation. However, further decline is likely as long as the resistance at 1.0871 remains intact. If the pair drops below 1.0760, the next target will be the 61.8% retracement level at 1.0740, with a potential further decline to the 1.0601 support level.
On the other hand, there are indications of a possible short-term bottoming, as seen in the bullish convergence condition in the 4-hour MACD. A break above the 1.0871 resistance level would signal a shift in bias to the upside, with the next target being the 55-day EMA at 1.0962.
Looking at the bigger picture, the price actions from the 2023 high of 1.1274 are viewed as a consolidation pattern within the uptrend from the 2022 low of 0.9534, with the recent fall from 1.1213 considered as the third leg. It is expected that the downside will be limited by the 50% retracement level of the upswing from 0.9534 to 1.1274 at 1.0404, paving the way for a potential resumption of the uptrend in the future.
In the long-term perspective, it is believed that a bottom has been established at the 2022 low of 0.9534. However, the EUR/USD pair is currently facing challenges in maintaining levels above the 55-month EMA at 1.1011. As a result, the outlook for the pair is deemed neutral at best for the time being. Traders and investors are advised to closely monitor key levels and technical indicators for further insights into the future direction of the EUR/USD pair.
