UOB Group’s FX Strategists famous EUR/USD might recede additional and re-visit the 1.2000 neighbourhood within the subsequent weeks.
24-hour view: “We anticipated EUR to ‘retest the 1.2090 degree’ yesterday and we held the view that ‘main assist at 1.2050 shouldn’t be anticipated to come back into the image’. The next decline exceeded our expectation as EUR plummeted to 1.2053 earlier than closing on a smooth word at 1.2059 (- 0.63%). Whereas oversold, the decline shouldn’t be displaying signal of stabilization and there’s room for EUR to dip under 1.2050. Nonetheless, a sustained decline under this degree seems unlikely for now and EUR is unlikely to problem the most important assist at 1.2000 (minor assist is at 1.2030). Resistance is at 1.2095 adopted by 1.2115.”
Subsequent 1-3 weeks: “We now have held the identical view since final Thursday (28 Jan, spot at 1.2105) whereby ‘danger is shifting to the draw back however EUR has to shut under 1.2050 earlier than a sustained decline might be anticipated’. We highlighted that ‘the chances for such a transfer are fairly excessive except EUR strikes above 1.2180’. EUR dropped sharply to 1.2053 yesterday (01 Feb) earlier than closing at 1.2059. Whereas downward momentum has improved, EUR nonetheless has to shut under 1.2050 earlier than a sustained decline might be anticipated. That mentioned, the chances for EUR to maneuver clearly under 1.2050 have elevated and would proceed to extend so long as EUR doesn’t transfer above 1.2140 (‘sturdy resistance’ degree beforehand at 1.2180). Wanting forward, the assist under 1.2050 is at 1.2000 adopted by 1.1965.”