EUR/USD downside pressure alleviated above 1.2435 – UOB

According to FX Strategists at UOB Group, the selling stance around EUR should be mitigated on a break above 1.2435.

Key Quotes

24-hour view: “We expected EUR to attempt “a move towards 1.2360” yesterday but the ease of which it took out the strong support was unexpected. The decline tested the major 1.2320 support (low of 1.2318) before staging a mild recovery. From here, there is room for further weakness but a sustained move below 1.2275 seems unlikely (1.2300 is already a strong support). All said, only a move back above 1.2400 would indicate that the current decline has stabilized (minor resistance is at 1.2365)”.

Next 1-3 weeks: “We highlighted on Monday (19 Feb, spot at 1.2420) that the strong rally in EUR last week is “unlikely to be sustained”. That said, the subsequent pullback has been more ‘resilient’ than expected as EUR tested the strong support at 1.2320 yesterday (overnight low of 1.2318). The undertone has weakened considerably but any further weakness is expected to face solid support at 1.2275. A clear break of this level would greatly increase the odds for a move below the 1.2204 low seen earlier this month. Overall, the current mild downward pressure in EUR is expected to increase further unless EUR can move and stay above 1.2435 within the next few days”.