Currency strategists at UOB Group point out that EUR/USD is still at risk of further falls in the short term.
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24 hour view: “Although we expected EUR/USD to weaken yesterday, we did not anticipate high volatility as EUR/USD fell back to 1.1105 before recovering to close at 1.1191 (-1.04%). The strong rebound from the New York low of 1.1105 appears to have room to spread, but a sustained rally above 1.1250 is unlikely (next resistance is 1.1280). Support is at 1.1170, followed by 1.1130.”
Next 1-3 weeks: “Yesterday (Feb 24, EUR/USD at 1.1285), we highlighted that downward momentum has improved and the possibility of EUR/USD moving to the next major support at 1.1240 has increased. However, we did not expect the way EUR/USD broke through 1.1240 and plunged to a 21-month low at 1.1105.Despite the subsequent strong rebound from the lows, further EUR/USD weakness is not ruled out.That said, conditions at short-term are deeply oversold and EUR/USD could move above 1.1105 for a couple of days first Only a break of 1.1310 (‘strong resistance’ was at 1.1360 yesterday) would indicate that the weak phase in EUR/USD that started at the beginning of last week is over. Looking ahead, the next support below 1.1105 is 1.1080.”
Source: Fx Street
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