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FX Strategists at UOB Group noted EUR/USD still faces a probable drop to the 1.2080 region in the next weeks.

Key Quotes

24-hour view: “We expected EUR to trade within a 1.2130/1.2205 range yesterday. However, it dropped to 1.2109 before rebounding quickly and ended the day little changed at 1.2156 (-0.01%). Downward momentum has improved a tad and the bias is tilted to the downside. That said, any weakness is likely limited to a retest of the 1.2110 level. The next support at 1.2080 is unlikely to come under threat. On the upside, a break of 1.2190 would indicate the current mild downward pressure has eased (minor resistance is at 1.2170).”

Next 1-3 weeks: “We have held a negative view in EUR since the start of the week. However, EUR has not been able to make much headway on the downside. Shorter-term momentum is building up again and there is still chance for EUR to edge down towards the solid support at 1.2080. Barring a sudden surge in momentum, the prospect for a sustained decline below this level is not high (next support is at 1.2050). On the upside, a break of 1.2220 (‘strong resistance’ level previously at 1.2250) would indicate the current soft patch in EUR has stabilized.”