In opinion of FX Strategists at UOB Group, EUR/USD risks further losses as long as it trades below 1.2250.
24-hour view: “We highlighted yesterday that ‘further advance in EUR is not ruled out but a clear break of 1.2250 is unlikely’. While EUR initially moved higher, it dropped sharply after touching 1.2222 (overnight low of 1.2138). Despite the relatively rapid decline, downward momentum has barely improved and the outlook for today is mixed. Overall, EUR is likely to consolidate and trade within a 1.2130/1.2205 range.”
Next 1-3 weeks: “Yesterday, we highlighted that ‘a break of 1.2250 would indicate that EUR is not ready to move to 1.2080’. We added, ‘in order to rejuvenate the flagging downward momentum, EUR has to move and stay below 1.2155 within these 1 to 2 days or 1.2080 is unlikely to come into the picture’. While the 1.2250 level is still intact as EUR retreated from a high of 1.2222, shorter-term downward momentum has not improved by much. That said, as long as 1.2250 is intact, there is scope for another push lower but this has to happen within these few days or downward momentum would wane quickly and this could to EUR trading sideways instead of heading lower.”