EUR/USD outlook now bearish, scope for a test of 1.2100 – UOB

According to FX Strategists at UOB Group, the pair’s bias is now bearish and is expected a visit to the 1.2100 handle in the near term.

Key Quotes

“We held the view yesterday that “a dip below 1.2165 is not ruled out but 1.2130 is unlikely to come into the picture”. EUR touched a low of 1.2153 but the subsequent strong and sharp rebound came as a surprise. The recovery appears to have scope to extend higher to 1.2300 but a move above the strong 1.2320 resistance seems unlikely. Support is at 1.2230 followed by 1.2185. We do not expect the 1.2153 low to be challenged for today”.

“We just turned bearish on EUR yesterday and there is no change to the view. As highlighted, the recent weakness has room to extend lower but 1.2100 is a major support and may not come into the picture so soon. That said, the subsequent sharp and swift rebound from a low of 1.2153 yesterday was not exactly expected but only a break of 1.2320 (‘stop-loss’ level unchanged) would indicate that a short-term low is in place. In the meanwhile, easing shorter-term downward momentum could lead to a few days of consolidation first (before the next down-leg can be expected)”.