According to the currency strategists at UOB Group, EUR / USD bullish momentum now looks impaired and could trigger a move to the 1.2045 level In the next weeks.
Key Comments:
24 hour view: “Our expectation for the EUR / USD to ‘trade sideways within a 1.2100 / 1.2150 range’ was incorrect as it rose to 1.2169 before falling sharply to a low of 1.2093. The sharp and rapid decline appears to be ahead of itself, but there is room for EUR / USD to move lower to 1.2070. For today, the next support at 1.2045 is unlikely to be threatened. Resistance is at 1.2115 followed by 1.2140 “.
Next 1-3 weeks: “A week ago (Feb 10, EUR / USD at 1.2115), we highlighted that ‘the vastly improved bullish momentum suggests that the current strength of the EUR / USD could break 1.2150 and extend to 1.2180’. As the EUR / USD rallied , we noted yesterday (Feb 16, EUR / USD at 1.2120) that ‘the bullish momentum has slowed down a bit, but the bullish risk remains intact.’ We add, ‘only a breakout of 1.2045 would indicate that the EUR / USD is not ready. to move above 1.2150. ‘While the EUR / USD subsequently broke 1.2150 and rose to 1.2169, the sudden strong selloff from the high was a surprise. The bullish momentum has deteriorated further and unless the EUR / USD can move and stay above 1.2140 in these 1-2 days, a break of 1.2045 (no change at the ‘strong support’ level) would not be surprising. “
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