EUR/USD: The end of the negative phase? – UOB

FX Strategists at UOB Group now expect EUR/USD to trade within a consolidative fashion for the time being.

Key Quotes

24-hour view: “We expected EUR to ‘dip below the major 1.0770 support’ last Friday but were of the view ‘a sustained drop below this level is not expected’. However, EUR only touched 1.0781 before rebounding strongly and sharply during NY hours (high of 1.0863). The rapid recovery appears to be running ahead of itself and EUR is unlikely to strengthen much further. From here, EUR is more likely to consolidate and trade sideways at these higher levels, expected to be between 1.0800 and 1.0875.”

Next 1-3 weeks: “While we noted last Friday (21 Feb, spot at 1.0795) that ‘downward momentum appears to be struggling and EUR has to break the major 1.0770 support before a move to 1.0740 can be expected’, the sudden and sharp rebound that touched a high of 1.0863 came as a surprise. The break of the ‘strong resistance’ level at 1.0845 indicates that the weak phase in EUR that started in early February (see annotations in the charts below) has ended. From here, EUR is deemed to have moved into a consolidation phase and is expected to trade sideways within a relatively broad range of 1.0770/1.0900.”