UOB Group currency strategists note that EUR / USD risks a probable drop to the 1.2080 region In the next weeks.
Key Comments:
24 hour view: “Yesterday we expected the EUR to ‘weaken to 1.2150’. We indicated that ‘the next support at 1.2125 is probably out of reach.’ Subsequently, the EUR / USD fell to 1.2130 before recovering slightly to close at 1.2149 (-0.56%) While the rapid decline is oversold, there is room for the EUR / USD to first test 1.2125 before stabilization can be expected. For today, the next major support at 1.2080 is not expected to be threatened. Resistance is at 1.2180 followed by 1.2205 “.
Next 1-3 weeks: “We highlighted yesterday (Jan 11, EUR / USD at 1.2185) that ‘the retracement in EUR / USD has room to move to 1.2125’. We add, ‘the odds of extension to 1.2080 are not high at the moment. Subsequently, the EUR / USD fell to 1.2130 before settling on a soft tone at 1.2149 (-0.56%). The rapid pace of the decline suggests that the possibility of the EUR / USD moving to 1.2080 has increased. In general, the current downside pressure on EUR / USD is considered intact as long as it does not move above 1.2250 (the ‘strong resistance’ level was at 1.2280 yesterday). “
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