The C wave that we were looking for to challenge 1.3391 may have ended at 1.3414 this morning. The 61.8% of 1.3254-1.3680 is at 1.3417. A rally through the short term resistance line drawn off of the 5/16 and 5/21 highs and 1.3474 would lend confidence to this view.
Although reward to risk favors longs here in the short term, we are wary of getting bullish longer term due to the extreme sentiment (USD bearishness), as evidenced by the COT report. The wave structure favors one more high above 1.3680 in a 5th wave before an impulsive decline occurs. 1.3414 must hold in order for this near term outlook to remain favored.