According to FX Strategists at UOB Group, the upside momentum in EUR/USD now looks deteriorated and could spark a move to the 1.2045 level in the next weeks.
Key Quotes
24-hour view: “Our expectation for EUR to ‘trade sideways within a 1.2100/1.2150 range’ was incorrect as it rose to 1.2169 before dropping sharply to an overnight low of 1.2093. The sharp and rapid drop appears to be running ahead of itself but there is room for EUR to move lower to 1.2070. For today, the next support at 1.2045 is unlikely to come under threat. Resistance is at 1.2115 followed by 1.2140.”
Next 1-3 weeks: “One week ago (10 Feb, spot at 1.2115), we highlighted that ‘vastly improved upward momentum suggests current EUR strength could break 1.2150 and extend to 1.2180’. As EUR moved higher, we noted yesterday (16 Feb, spot at 1.2120) that ‘upward momentum has slowed a tad but the upside risk remains intact’. We added, ‘only a break of 1.2045 would indicate that EUR is not ready to move above 1.2150’. While EUR subsequently cracked 1.2150 and rose to 1.2169, the sudden and sharp sell-off from the high came as a surprise. Upward momentum has deteriorated further and unless EUR can move and stay above 1.2140 within these 1 to 2 days, a break of 1.2045 (no change in ‘strong support’ level) would not be surprising and would indicate that 1.2169 is the extent of the current EUR strength.”
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