EUR/USD could potentially be going to the 1.1800 area, according to UOB Group FX Strategists.
Observation for 24 hours: “While we expected the EUR to fall yesterday, we thought a “clear break of 1.1865″ was improbable. The subsequent downturn outperformed our expectations, with the EUR falling to 1.1843 before closing at 1.1855. The slide has gained traction, and today’s danger is still to the downside. Any weakening is likely to be restricted to 1.1825 due to the oversold conditions. The major support level of 1.1800 is unlikely to be challenged. A break over 1.1895 (minor resistance is at 1.1875) on the upside would signal that the current negative pressure has abated.”
Within the next 1-3 weeks: “We kept the view on Monday (28 June, spot at 1.1940) that the EUR’s movement is part of a consolidation and that it will ‘trade within a 1.1865/1.12005 range.’ ‘Looking ahead, the consolidation is projected to be resolved with a fresh weak phase, although EUR must close at 1.1845 before a protracted decrease can be envisaged,’ we said yesterday (30 June). After that, the EUR fell to 1.1843 before closing at 1.1855. (-0.34 percent ). While a close below 1.1845 would have been preferable, the rapid build-up of downward momentum indicates that the EUR is likely to trade with a bearish bias towards 1.1800. At this point, the chances of a sustained drop below this level are slim. Overall, the EUR is projected to remain under pressure unless it can break through the 1.1915’strong resistance’ level.”/n
