EUR/USD risks potential downside near-term – UOB

In opinion of FX Strategists at UOB Group, EUR/USD’s momentum could be shifting to the downside in the short-term.

Key Quotes

24-hour view: “Our expectation for the ‘rebound in EUR to extend’ was incorrect as it plummeted to 1.2056 before snapping back up to end the day at 1.2108 (-0.43%). Despite the bounce, the bias remains on the downside even though 1.2050 is a solid support and may not be easy to crack. On the upside, a break of 1.2155 would indicate that the current downside risk has dissipated (minor resistance is at 1.2135).”

Next 1-3 weeks: “We have held the same view since last Friday (22 Jan, spot at 1.2165) where we expect EUR to ‘trade between 1.2080 and 1.2250 for a period of time’. Since then, EUR has traded mostly sideways but it dropped sharply to 1.2056 yesterday. Shorter-term downward momentum is improving and the risk is shifting to the downside. That said, EUR has to close below 1.2050 before a sustained decline can be expected. The odds for such a move are quite high unless EUR moves above 1.2180 within these few days. Looking ahead, the next support below 1.2050 is at 1.2000.”