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FX Strategists at UOB Group see EUR/USD still testing 1.2200 as long as it trades above 1.2040 in the next weeks.

Key Quotes

24-hour view: “Yesterday, we expected EUR to consolidate ‘within a lower range of 1.2065/1.2150’. EUR subsequently traded in a muted manner and within a much narrower than expected (1.2094/1.2133) before closing largely unchanged at 1.2101 (-0.06%). The quiet price actions offer no fresh clues and further consolidation would not be surprising. Expected range for today, 1.2075/1.2145.”

Next 1-3 weeks: “Two days ago (07 Dec, spot at 1.2125), we highlighted that ‘shorter-term overbought conditions could lead to a few days of consolidation first’. We added, ‘as long as 1.2040 is intact, there is still chance for EUR to move to 1.2200’. While there is no change in our view for now, EUR could not afford to dither around current level or the loss in momentum would diminish the chance for another push higher to 1.2200. Conversely, a break of 1.2040 (no change in ‘strong support’ level) would indicate that the positive phase in EUR that started about 2 weeks ago has run its course.”