UOB Group currency strategists forecast a further decline in EUR / USD below 1.2080.
Key Comments:
24 hour view: “Yesterday we highlighted that ‘the bullish momentum has improved a bit and the bias is leaning higher.’ We added that ‘any EUR / USD advance is expected to face strong resistance at 1.2170’. However, the 1.2170 level was not tested as EUR / USD fell sharply after hitting 1.2157 (daily low at 1.2075). The rapid decline appears to be ahead of itself and while a drop below the previous day’s low of 1.2075 is not ruled out, it is unlikely that the next support at 1.2050 is threatened. Resistance is at 1.2135 followed by 1.2155 “.
Next 1-3 weeks: “There is not much to add to our update yesterday (Jan 20, EUR / USD at 1.2130). As highlighted, the EUR / USD ‘has to move and stay below 1.2080 within these 1-2 days or the odds of a downward move towards 1.2010 would diminish rapidly’. On the upside, a break of 1.2170 (unchanged ‘strong resistance’ level) would indicate that the weak phase that started early last week is over. “
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