FX Strategists at UOB Group reiterated that the pair stays sidelined in the short term, likely between 1.1730 and 1.1885.
24-hour view: “The rapid drop in volatility came as a surprise as EUR registered an ‘inside day’ and traded within a tight range of less than 40 pips (between 1.1782 and 1.1819). The short-term outlook is unclear and further range trading seems likely. Expected range for today; 1.1780/1.1830”.
Next 1-3 week: “EUR hit a low of 1.1738 yesterday, holding above the bottom of our expected 1.1730/1.1885 consolidation range. The quick rebound from the low reinforces our current neutral view for EUR and for now, we continue to expect this pair to trade sideways between 1.1730 and 1.1885. We have been neutral for more than 2 weeks now (since 07 Aug) and the consolidation since then has eased the overbought conditions. This suggest that the risk of a ‘deeper pull-back’ has diminished even though this pair has to move clearly above the 1.1909 high seen earlier this month to indicate that it has moved back into a bullish phase”.
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