UOB Group currency strategists note that EUR / USD has now entered a trading range between 1.1950 and 1.2150.
Key Comments:
24 hour view: “Last Friday, we highlighted that ‘the strong and rapid decline seems exaggerated, but further weakness of the EUR / USD is not ruled out.’ We added, ‘the next major support at 1.1910 is probably out of reach for now.’ EUR / USD fell to 1.1950 before making a surprisingly strong and robust bounce (high of 1.2049 during the American session on Friday). The rapid rise appears to be ahead of itself and further sustained advance is unlikely. More likely for EUR / USD to move sideways between these higher levels, which are expected to be between 1.2010 and 1.2075 “.
Next 1-3 weeks: “We highlighted last Friday that ‘momentum remains strong and further weakness of EUR / USD seems likely towards the next support at 1.1910’. We do not anticipate the sudden strong rebound from 1.1950 to 1.2049. While our level of ‘strong resistance ‘at 1.2055 is still intact, momentum has diminished considerably and the outlook for EUR / USD to move to 1.1910 has dissipated less. In other words, the weak phase of EUR / USD that started late last month has finished. From here on, the EUR / USD is considered to have moved into a consolidation phase between 1.1950 and 1.2150. Looking ahead, barring a clear break above 1.2150, the EUR is expected to make another attempt to get closer to 1.1900 at a later stage ”.
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