EUR/USD: diminishing bets for extra weakness – UOB
FX Strategists at UOB Group believe that further retracements in EUR/USD now look unlikely in the near-term.
24-hour view: “We indicated yesterday that ‘despite making fresh low, the price action lacks momentum and the downside risk appears to be limited’. EUR subsequently traded between 1.1000 and 1.1038, narrower than our expected sideway-trading range of 1.0995/1.1040. While the underlying tone has firmed somewhat, we continue to expect EUR to trade sideways for now, albeit at a higher range of 1.1010/1.1060.”
Next 1-3 weeks: “As highlighted, despite the recent weakness, ‘downward momentum has not improved by all that much’. EUR subsequently rebounded and ended the day on a relatively firm note (NY close of 1.1030, +0.19%). The price action has increased the risk of a break of 1.1070 (no change in ‘strong resistance’ level) and a move above this level would indicate that the weakness in EUR that started earlier this month has run its course. In other words, the weak phase appears to be close to ending.”