UOB Group currency strategists have noted that EUR / USD could face a deeper pullback if it falls below 1.2050 in the near term.
Key Comments:
24 hour view: “We highlighted last Friday that ‘the downward pressure has eased’ and we expected EUR / USD to ‘trade sideways within the 1.2085 / 1.2150 range’. The EUR / USD subsequently moved between 1.2092 and 1.2155 before closing. slightly to the upside at 1.2136. While it would not be surprising if the sideways move extends, the weaker underlying tone suggests that EUR / USD could retest the 1.2090 level. Main support at 1.2050 is not expected to enter the scene Resistance is at 1.2145 followed by 1.2160 “.
Next 1-3 weeks: “There is not much to add to our update last Thursday (Jan 28, EUR / USD at 1.2105). As highlighted, ‘short-term bearish momentum is improving and risk is shifting lower.’ That being said, the EUR / USD has to close below 1.2050 before a sustained decline can be expected. The odds of such a move are quite high unless the EUR / USD moves above 1.2180. Looking ahead, the next support below 1.2050 is at 1.2000 “.
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