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FX Strategists at UOB Group hinted at the idea that EUR/USD could be entering into a consolidative phase.

Key Quotes

24-hour view: “Our expectation for ‘further gains in EUR’ was wrong as it plummeted during NY hours and sliced through several strong support levels. While the rapid drop appears to be running ahead itself, there is room for EUR to weaken further to 1.1805. For today, the next support at 1.1780 is unlikely to come into the picture. Resistance is at 1.1865 but only a move above 1.1890 would indicate the current weakness has stabilized.”

Next 1-3 weeks: “We highlighted yesterday (19 Aug, spot at 1.1945) that EUR ‘has moved into a positive phase’ and was proven wrong quickly as EUR gave up all of its gains from Tuesday and plunged below our ‘strong support’ level of 1.1840 (low of 1.1828). Such sharp reversal after break of key levels is not common. From here, we view the current price action as the early stages of a consolidation phase. For the next couple of weeks, EUR is likely to trade between 1.1740 and 1.1950. Looking forward, if EUR were to close 1.1740, it would suggest the start of a sustained pullback in EUR.”