FX Strategists at UOB Group note the pair remains poised for extra consolidation in the near term.
24-hour view: “We expected EUR to retest the strong 1.1680/90 support zone and the ease of which this level was taken out during NY hours came as a surprise (low of 1.1663). Downward pressure has clearly shifted to the downside but at this stage, it is unclear whether the current decline in EUR can be sustained. That said, barring a move back above 1.1720, we expect EUR to stay under pressure even though any weakness is unlikely to move clearly below the 1.1630 support. The next support is at 1.1590 and this level is not expected to come into the picture for now”.
Next 1-3 weeks: “We highlighted yesterday that “EUR could still stage another attempt to break 1.1790 but this has to happen within these 1 to 2 days”. Time has run out for those looking for a higher EUR as the break of the ‘key support’ at 1.1680 suggests that Monday’s (09 Jul) 1.1790 high is a short-term top. At this stage, there is no change to the current neutral outlook but EUR has likely moved into a broad sideway consolidation range. In other words, we expect EUR to trade sideways from here, likely within a 1.1590/1.1760 range”.
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