EUR/USD sticks to the consolidation theme – UOB

FX Strategists at UOB Group expect EUR/USD to move within the 1.1720-1.1880 range in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘upward pressure has more or less dissipated’ and expected EUR to ‘trade sideways within a 1.1790/1.1880 range’. EUR subsequently traded between 1.1778 and 1.1843 before closing little changed at 1.1814 (+0.01%). Momentum indicators are mostly neutral and further sideway-trading would not be surprising, albeit likely at a lower range of 1.1775/1.1855.”

Next 1-3 weeks: “EUR dipped a couple of pips below our ‘strong support’ of 1.1780 yesterday (low of 1.1778) before recovering to end the day little changed at 1.1814 (+0.01%). The price action was not surprising as we highlighted earlier yesterday that ‘odds for further EUR strength have diminished’. The break of the ‘strong support’ level indicates that EUR is not ready to move towards the year-to-date at 1.2011 (we previously held the view that EUR has to close above 1.1915 before a move to 1.2011 can be expected). The current movement is viewed as the early stages of a consolidation phase even though the slightly soft underlying tone suggests EUR is likely to edge lower towards the bottom of the expected 1.1720/1.1880 range first.”