In opinion of FX Strategists at UOB Group, further decline to the 1.1800 area seems to be losing momentum in EUR/USD.
Key Quotes
24-hour view: “We highlighted last Friday that EUR ‘could dip below 1.1825 but the next major support at 1.1800 is likely out of reach’. While our view was not wrong as EUR dropped to 1.1805, we did not anticipate the subsequent sharp and robust rebound to 1.1874. Downward momentum has dissipated and the current movement is viewed as part of a consolidation phase. For today, EUR is likely to trade sideways between 1.1835 and 1.1890.”
Next 1-3 weeks: “Last Thursday (01 Jul, spot at 1.1855), we indicated that EUR ‘is likely to trade with a downward bias towards 1.1800’. We added, ‘at this stage, the odds for a sustained decline below this level are not high’. EUR dropped to 1.1805 on Friday before snapping back up to close slightly higher at 1.1864 (+0.14%). Downward momentum has waned and the prospect for EUR to move below 1.1800 has diminished. However, only a break of 1.1915 (no change in ‘strong resistance’ level) would indicate that the downside risk has dissipated. In order to rejuvenate the current flagging momentum, EUR has to move and stay below 1.1835 within these 1 to 2 days or a break of 1.1915 would not be surprising.”
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