EUR/USD bearish now, could visit 1.2100 – UOB

The pair faces the likelihood of a visit to the 1.2100 area in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “In line with expectation, EUR took out the strong 1.2204 support but did not have enough momentum to challenge the next support at 1.2165 (overnight low of 1.2186). While the decline is oversold, there is no sign of stabilization just yet and further weakness seems likely. That said, any further down-move is expected to be at a slower pace and while a dip below 1.2165 is not ruled out, the next support at 1.2130 is unlikely to come into the picture. Resistance is at 1.2220 but only a move back above 1.2250 would suggest that an interim low is in place”.

Next 1-3 weeks: “One week after we highlighted the increasing odds for further weakness towards 1.2204, EUR cracked this level as it dropped to an overnight low of 1.2186. The subsequent weak daily closing suggests that the weakness has room to extend lower but there is another major support at 1.2100 and this level may not come into the picture so soon. 1.2100 is a rather critical support especially on the weekly chart and a break of this level would be a good indication that we may have seen a significant top at 1.2555 last month. For now, we expect EUR to continue to move lower towards 1.2100 and only a break above 1.2320 would indicate that our view is wrong”.