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EUR/USD faces a potential leg lower although solid support emerges at 1.2200, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected EUR to ‘consolidate within a 1.2200/1.2280 range’ yesterday. However, it rose to a high of 1.2309 before retreating quickly. The underlying tone has softened and this could lead to EUR edging lower. That said, any decline is unlikely to break the support at 1.2200 (minor support is at 1.2225). Resistance is at 1.2280 followed by the high at 1.2309. The latter level is unlikely to come into the picture for today.”

Next 1-3 weeks: “EUR eked out a fresh high of 1.2309 last Thursday before dropping sharply. Further EUR strength is not ruled out but upward momentum appears to be struggling and the risk of a top has increased. Unless EUR surges above 1.2309 and stays above this level within these few days, the odds for further EUR strength would diminish quickly (next resistance is at 1.2330). On the downside, a break of 1.2170 (‘strong support’ level) would indicate that EUR could consolidate and trade sideways for a period of time.”