FX Strategists at UOB Group don’t rule out EUR/USD slipping again beneath the 1.20 mark within the subsequent weeks.
24-hour view: “We highlighted yesterday that ‘there’s room for EUR to dip beneath 1.2050’. We added, ‘a sustained decline beneath this stage seems unlikely for now and EUR is unlikely to problem the main help at 1.2000’. Whereas our expectation for a weaker EUR was not incorrect, the decline was sharper than anticipated as EUR dropped to 1.2010 earlier than rebounding. From right here, oversold situations coupled with waning momentum recommend EUR is unlikely to weaken at this time. EUR is extra prone to consolidate and commerce between 1.2015 and 1.2075.”
Subsequent 1-3 weeks: “Now we have held a unfavorable view in EUR since final Thursday. Yesterday (02 Feb), we highlighted that ‘odds for EUR to maneuver clearly beneath 1.2050 have elevated’. We famous that ‘the help beneath 1.2050 is at 1.2000 adopted by 1.1965’. EUR subsequently cracked 1.2050 and plummeted to 1.2010 earlier than recovering to shut at 1.2042 (-0.14%). Downward momentum has improved and additional EUR weak spot is probably going. That mentioned, oversold shorter-term situations might result in a few days of consolidation first. Trying forward, so long as 1.2105 (‘sturdy resistance’ stage was at 1.2140 yesterday) isn’t breached, a break of 1.2000 wouldn’t be shocking and would open up the best way for EUR to maneuver decrease to 1.1965.”