FX Strategists at UOB Group noted the pair’s potential for extra pullbacks appears diminished in the near term.
24-hour view: “We expected a higher EUR yesterday but were of the view that a clear break above 1.2315 is unlikely. However, EUR managed to hit a high of 1.2330 before ending the day on a solid note. The undertone has improved further and a test of the next resistance at 1.2350 seems likely before a pullback can be expected (prospect for further extension to 1.2380 is not high). Only a move back below 1.2280 would indicate that the immediate upward pressure has eased. Minor support is at 1.2300”.
Next 1-3 weeks: “In recent updates, we expected EUR to “remain on the back foot unless it can move above 1.2350”. The recent weak undertone is beginning to stabilize as EUR staged a robust recovery from last Friday’s 1.2212 low. The odds for downward extension towards last month’s 1.2153 low have diminished and a while a move above 1.2350 would not change the neutral outlook, it would indicate that EUR has moved into a higher sideway consolidation range”.
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