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Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group suggest a sustained decline in EUR/USD has lost impulse as of late.
24-hour view: “We highlighted yesterday that EUR ‘is unlikely to weaken further’ and we expected it to ‘consolidate within a range of 1.0650/1.0720’. Our view was not wrong even though EUR traded within a narrower range than expected (1.0669/1.0704). The muted price actions offer no fresh clues and EUR could continue to consolidate, likely between 1.0660 and 1.0710.”
Next 1-3 weeks: “We have held a negative view in EUR since last Thursday. After EUR dropped to 1.0611 and rebounded strongly, we indicated yesterday (20 Feb, spot at 1.0685) that that downward momentum has waned somewhat and the likelihood of a sustained decline in EUR below 1.0615 is not high. We continue to hold the same view. Overall, only a breach of 1.0740 (no change in ‘strong resistance’ level from yesterday) would indicate that the current downward pressure has eased. To put it another, a breach of 1.0740 would indicate that EUR could consolidate and range trade for a period of time.”
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