EUR/USD risks further downside below 1.2080 – UOB

FX Strategists at UOB Group forecast further decline in EUR/USD while below 1.2080.

Key Quotes

24-hour view: “We highlighted yesterday that ‘upward momentum has improved a tad and the bias is tilted to the upside’. We added, ‘any advance in EUR is expected to face stiff resistance at 1.2170’. However, the 1.2170 level was untested as EUR dropped sharply after touching 1.2157 (overnight low of 1.2075). The rapid decline appears to be running ahead of itself and while a dip below the overnight low of 1.2075 is not ruled, the next support at 1.2050 is unlikely to come under threat. Resistance is at 1.2135 followed by 1.2155.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (20 Jan, spot at 1.2130). As highlighted, EUR ‘has to move and stay below 1.2080 within these 1 to 2 days or the odds for a move lower to 1.2010 would diminish quickly’. On the upside, a break of 1.2170 (no change in ‘strong resistance’ level) would indicate that the weak phase that started earlier last week (see annotations in the chart below) has run its course.”