The currency strategists of UOB Group noted that the EUR / USD could pull back even more and go back to visit the neighborhood of 1,2000 In the next weeks.
24 hour perspective: “We expected the EUR to retest the 1.2090 level yesterday and held the view that significant support at 1.2050 was not expected to come on the scene. The subsequent drop exceeded our expectations as the euro plunged to 1.2053 before closing on a soft note at 1.2059 (-0.63%). While it is oversold, the decline shows no signs of stabilizing and there is room for the EUR to fall below 1.2050. However, a sustained drop below this level seems unlikely for now and is Euro unlikely to challenge main support at 1.2000 (minor support is at 1.2030). Resistance is at 1.2095 followed by 1.2115 “.
Next 1-3 weeks: “We have held the same view since last Thursday (Jan 28, pair at 1.2105) in which risk was shifting lower, but the EUR had to close below 1.2050 before a decline could be expected We note that “the odds of such a move were quite high unless the EUR moved above 1.2180.” The euro fell sharply to 1.2053 yesterday (Feb 1) before closing at 1.2059. Bearish momentum has improved, the EUR has yet to close below 1.2050 before a sustained decline can be expected.Probabilities of it moving clearly below 1.2050 have increased and would continue to increase as long as the EUR does not move above 1.2140 (“strong resistance” level previously at 1.2180). Looking ahead, support below 1.2050 is at 1.2000 followed by 1.1965 ”.
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