EUR/USD extra pullbacks could test 1.2204 – UOB

FX Strategists at UOB Group noted the pair’s stance remains neutral and there is scope for a visit to the 1.2200 area in the near term.

Key Quotes

24-hour: “EUR rebounded from a higher level than expected as it rose sharply from 1.2258. While the recovery has scope to extend higher to 1.2360, any advance is viewed as part a broader 1.2280/1.2360 consolidation range and not the start of a sustained rally. The next resistance above 1.2360 at 1.2400 is a strong level and is unlikely to be seriously threatened”.

Next 1-3 weeks: “We highlighted yesterday that the mild downward pressure in EUR would increase further unless it can reclaim 1.2435. EUR slipped further in overnight trading and is pressuring the solid 1.2275 support at the time of writing. Downward pressure has clearly improved and the odds for further weakness towards the month-to-date low of 1.2204 have increased considerably. Looking further ahead, a clear break below 1.2204 would indicate that EUR has moved into a bearish phase. For now, we hold a ‘negative’ outlook for EUR unless it can move back above 1.2400 within the next few days. On a shorter-term note, 1.2360 is already a strong resistance”.