EUR/USD: Upward momentum loses traction – UOB
FX Strategists at UOB Group noted EUR/USD could be losing some upside traction.
24-hour view: “Our view from yesterday was that ‘there is room for EUR to move below the overnight low of 1.1273 but prospect for a break of the strong support at 1.1230 is not high’. Our expectation was correct as EUR dipped to 1.1256 before ending the day on a soft note (NY close of 1.1267). While downward momentum has not improved by much, the risk is for further EUR weakness towards 1.1230. A breach of this level would not be surprising but the next level at 1.1200 is a strong support and may not yield so easily. Overall, EUR is expected to stay under pressure unless it can recover above 1.1320 (minor resistance is at 1.1290).”
Next 1-3 weeks: “We highlighted yesterday (10 Mar, spot at 1.1410) that ‘while there is no sign of a top just yet, EUR has to close above 1.1500 in order to indicate it has enough momentum to move to 1.1580’. We added, ‘meanwhile, EUR could consolidate for a couple of days’. Instead of consolidating, EUR surrendered all of Monday’s (09 Mar) strong gains as it plummeted to an overnight low of 1.1273. Upward momentum has been dented and EUR has to move and stay above 1.1390 within these 1 to 2 days or a break of 1.1230 (no change in ‘strong support’ level) would indicate that the rally that started in late February has found a top at Monday’s high of 1.1496.”