EUR/USD under pressure, likelihood of further downside – UOB

In opinion of FX Strategists at UOB Group, the pair’s weakness should allow for a deeper pullback in the near term.

Key Quotes

24-hour view: “Instead of a ‘retest’ of the 1.2255 support (as expected yesterday), EUR broke below this level and slumped to a low of 1.2216. The decline appears to be running ahead of ahead of itself and further sustained weakness seems unlikely, at least for today. EUR is more likely to consolidate its loss and trade sideways at these lower levels. Expected range for today; 1.2220/1.2290”.

Next 1-3 weeks: “We highlighted on Wednesday (04 Apr, 1.2275) that the undertone for EUR has weakened and that “a dip below 1.2235 would not be surprising” but “any weakness is expected to encounter solid support” at the March’s low of 1.2153. EUR dipped to a low of 1.2216 yesterday before rebounding. Despite the bounce, the undertone remains weak and the immediate pressure is still on the downside. That said, in view of the lackluster momentum, we continue to expect solid support near 1.2153. In other words, EUR is still on the back foot unless it can move back above 1.2350 (key resistance previously at 1.2420)”.