UOB Group currency strategists forecast that EUR / USD will extend its rally if it breaks above the 1.2309 region in the coming weeks.
Key Comments:
24 hour view: “EUR / USD climbed to a high of 1.2309 last Thursday before falling sharply. The rapid decline amid overbought conditions indicates that 1.2309 is likely to be a short-term high. That said, the sharp decline appears to be ahead of itself and further sustained EUR weakness is unlikely. The EUR / USD is more likely to consolidate and be within a range of 1.2200 / 1.2285 ”.
Next 1-3 weeks: EUR / USD hit a fresh high of 1.2309 last Thursday before falling sharply. Greater EUR strength is not ruled out, but bullish momentum appears to be struggling and the risk of a top has increased. Unless the EUR / USD rises above 1.2309 and remains above this level in these few days, the odds of further EUR strength would decline rapidly (next resistance is at 1.2330). On the downside, a breakout of 1.2170 (‘strong support’ level) would indicate that EUR / USD could consolidate and move sideways for a period of time. “
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