UOB Group’s FX Strategists noted EUR/USD could recede further and re-visit the 1.2000 neighbourhood in the next weeks.
Key Quotes
24-hour view: “We expected EUR to ‘retest the 1.2090 level’ yesterday and we held the view that ‘major support at 1.2050 is not expected to come into the picture’. The subsequent decline exceeded our expectation as EUR plummeted to 1.2053 before closing on a soft note at 1.2059 (- 0.63%). While oversold, the decline is not showing sign of stabilization and there is room for EUR to dip below 1.2050. However, a sustained decline below this level appears unlikely for now and EUR is unlikely to challenge the major support at 1.2000 (minor support is at 1.2030). Resistance is at 1.2095 followed by 1.2115.”
Next 1-3 weeks: “We have held the same view since last Thursday (28 Jan, spot at 1.2105) wherein ‘risk is shifting to the downside but EUR has to close below 1.2050 before a sustained decline can be expected’. We highlighted that ‘the odds for such a move are quite high unless EUR moves above 1.2180’. EUR dropped sharply to 1.2053 yesterday (01 Feb) before closing at 1.2059. While downward momentum has improved, EUR still has to close below 1.2050 before a sustained decline can be expected. That said, the odds for EUR to move clearly below 1.2050 have increased and would continue to increase as long as EUR does not move above 1.2140 (‘strong resistance’ level previously at 1.2180). Looking ahead, the support below 1.2050 is at 1.2000 followed by 1.1965.”
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