EUR/USD expected to remain sidelined – UOB

FX Strategists at UOB Group believe the pair could extend the consolidative theme in the short-term horizon.

Key Quotes

24-hour view: “Expectation for sideway trading was wrong as EUR dropped sharply to an overnight low of 1.2298. While the decline appears to be running ahead of itself, there is no sign of stabilization just yet and further weakness seems likely from here. That said, any down-move is expected to face solid support near last week’s low at 1.2270 (followed by another rather strong support level at 1.2240). On the upside, we expect 1.2385 to be strong enough to cap any intraday rebound (minor resistance is at 1.2350)”.

Next 1-3 weeks: “While the relatively large decline in EUR yesterday was not exactly expected, it is premature to expect the start of a sustained down move. There is no change to the neutral outlook for EUR and the current movement is still viewed as part of a consolidation phase. However, a clear break below the strong 1.2270 support would indicate that the immediate pressure has shifted to the downside and this could lead to a test of the 1.2200 support. The prospect for such a scenario is not high at this stage but would continue to improve unless EUR can move and stay above 1.2385 within these few days”.