A downside breakout of 1.20 is not ruled out – UOB

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The currency strategists of UOB Group They don’t rule out EUR / USD falling back below the .20 mark in the coming weeks.

24 hour perspective: “We highlighted yesterday that there was room for the EUR to fall below 1.2050. We added, that a sustained decline below this level seemed unlikely for now and the EUR was unlikely to challenge the main support at 1.2000. Expectation of a weaker euro was not bad, the decline was steeper than expected as it fell to 1.2010 before rebounding. From here on, oversold conditions coupled with waning momentum suggest that EUR is unlikely to weaken today. It is more likely that the EUR is consolidated and traded between 1.2015 and 1.2075“.

Next 1-3 weeks: “We have had a negative view on the EUR since last Thursday. Yesterday (Feb 2), we highlighted that the odds of the euro moving clearly below 1.2050 had increased. We noted that support below 1.2050 was at 1.2000 followed by 1.1965. Subsequently, the EUR broke 1.2050 and plummeted to 1.2010 before recovering to close at 1.2042 (-0.14%). The bearish momentum has improved and the EUR is likely to weaken. That said, short-term oversold conditions could lead to a couple of days of consolidation first. Looking ahead, as long as 1.2105 doesn’t break (the ‘strong resistance’ level was at 1.2140 yesterday), a breakout of 1.2000 would not be surprising and would open the way for the EUR to move lower to 1.1965“.

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