EUR / USD faces a possible move lower, although solid support is seen at 1.2200, suggest currency strategists at UOB Group.
Key Comments:
24 hour view: “We expected the EUR / USD to ‘consolidate in a 1.2200 / 1.2280 range’ yesterday. However, it rose to a high of 1.2309 before rapidly reversing. The underlying tone has softened and this could lead to EUR / USD That said, any decline is unlikely to break support at 1.2200 (minor support is at 1.2225). Resistance is at 1.2280 followed by high at 1.2309. The latter level is unlikely to enter the scene today. “
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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