FX Strategists at UOB Group noted EUR/USD now risks a potential drop to the 1.2050 region in the next weeks.
24-hour view: “The swift and sharp decline in EUR to a low of 1.2091 last Friday came as a surprise (we were expecting EUR to trade between 1.2140 and 1.2200). The rapid drop is accompanied by strong momentum and EUR is expected to weaken further. That said, oversold conditions suggest that the next major support at 1.2050 is likely out of reach (there is another support at 1.2075). On the upside, 1.2150 is expected to be strong enough to cap any rebound (minor resistance is at 1.2135).”
Next 1-3 weeks: “Our latest narrative was from last Wednesday (09 Jun, spot at 1.2175) where EUR ‘could trade between 1.2125 and 1.2220 for a period of time’. We highlighted that EUR ‘has to close below 1.2125 or above 1.2220 before a sustained directional move can be expected’. EUR plummeted to 1.2091 last Friday before closing on a weak note at 1.2106 (-0.52%). Rapid improvement in downward momentum suggests that EUR is likely to trade with a downward bias towards 1.2050. Resistance is at 1.2150 but only a break of 1.2180 (‘strong resistance’ level) would indicate that the current downward pressure in EUR has eased.”
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