EUR/USD still poised for further pullbacks – UOB

In opinion of FX Strategists at UOB Group, EUR/USD still risks extra downside in the next weeks.

Key Quotes

24-hour view: “Yesterday, we held the view that EUR ‘could edge higher but any advance is likely limited to a test of 1.1815’. We indicated that ‘the strong resistance at 1.1835 is unlikely to come under threat’. EUR popped briefly to a high of 1.1830 during London hours before dropping back down quickly (low has been 1.1756). Downward momentum has improved a tad and the bias for today is tilted to the downside. A breach of 1.1750 is not ruled out but the major support at 1.1730 is unlikely to come into the picture. Resistance is at 1.1795 followed by 1.1820.”

Next 1-3 weeks: “On Wednesday (21 Jul, spot at 1.1780), we highlighted that EUR ‘is under mild downward pressure and could edge lower but it is too soon to expect a move to the major support at 1.1700’. We added, ‘a break of 1.1835 would indicate the current mild downward pressure has eased’. There is no change in our view for now as EUR popped briefly to 1.1830 yesterday before dropping back down. From here, EUR could edge lower but it still appears too soon to expect a decline to 1.1700. On a shorter-term note, 1.1730 is already quite a strong support level. All in, the current mild downward pressure is deemed intact as long as EUR does not move above 1.1835 (no change in in ‘strong resistance’ level).”