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UOB Group’s FX Strategists noted EUR/USD could retreat to 1.1965 if 1.2000 is breached in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘oversold conditions coupled with waning momentum suggest EUR is unlikely to weaken’. We added, EUR ‘is more likely to consolidate and trade between 1.2015 and 1.2075’. EUR subsequently dipped to 1.2002 before rebounding to close little changed for the day (1.2034, -0.07%). Conditions remain oversold and the risk of EUR breaking the major support at 1.2000 is not high. For today, EUR is more likely to trade sideways between 1.2015 and 1.2070.”

Next 1-3 weeks: “We have held a negative view in EUR since last Thursday. Yesterday (02 Feb), we highlighted that ‘odds for EUR to move clearly below 1.2050 have increased’. We noted that ‘the support below 1.2050 is at 1.2000 followed by 1.1965’. EUR subsequently cracked 1.2050 and plummeted to 1.2010 before recovering to close at 1.2042 (-0.14%). Downward momentum has improved and further EUR weakness is likely. That said, oversold shorter-term conditions could lead to a couple of days of consolidation first. Looking ahead, as long as 1.2105 (‘strong resistance’ level was at 1.2140 yesterday) is not breached, a break of 1.2000 would not be surprising and would open up the way for EUR to move lower to 1.1965.”