EUR/USD focus is now on 1.2212 – UOB

FX Strategists at UOB Group remain neutral on spot and expect a test of the 1.2212 level in the next weeks.

Key Quotes

24-hour view: “Instead of a staging a ‘dip’ (as expected last Friday), EUR broke through a couple of strong support levels with ease and slumped to a low of 1.2248. The decline appears to be running ahead of itself and further weakness seems unlikely. That said, it is too soon to expect a recovery and EUR is more likely to consolidate its loss and trade sideways at these lower levels. Expected range for today; 1.2245/1.2315”.

Next 1-3 weeks: “We highlighted last Friday that the near-term bias is “tilted to the downside but any weakness is viewed as part of a 1.2260/1.2400 sideway trading range instead of a sustained decline”. However, the subsequent rapid pace of decline that hit a low of 1.2248 came as a surprise. The immediate pressure has shifted to the downside and from here; we expect further EUR weakness towards the month-to-date low of 1.2212. Further extension to last month’s 1.2153 low is not ruled out but at based on the current momentum indicators, the odds for such a move are not very high. All in, we expect EUR to stay under pressure in the coming days unless it can reclaim the ‘key resistance’ at 1.2355”.