In the opinion of the currency strategists at UOB Group, EUR / USD momentum could be turning lower in the short term.
Key Comments:
24 hour view: “Our expectation that the ‘EUR / USD bounce extends’ was incorrect as it fell to 1.2056 before rising again to end the day at 1.2108 (-0.43%). Despite the bounce, the bias remains at the downside with 1.2050 being solid support and may not be easy to break out. On the upside, a breakout of 1.2155 would indicate that the current downside risk has dissipated (minor resistance is at 1.2135) “.
Next 1-3 weeks: “We have held the same view since last Friday (Jan 22, EUR / USD at 1.2165), where we expect EUR / USD to ‘trade between 1.2080 and 1.2250 for a period of time.’ Since then, EUR / USD It has moved mostly sideways but fell sharply to 1.2056 yesterday. Short-term bearish momentum is improving and risk is shifting lower. That 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 EUR / USD moves above 1.2180 in these few days. Looking ahead, the next support below 1.2050 is at 1.2000 “.
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