FX Strategists at UOB Group noted EUR/USD risks a probable drop to the 1.2080 region in the next weeks.
24-hour view: “Yesterday, we expected EUR to ‘weaken to 1.2150’. We indicated that ‘the next support at 1.2125 is likely out of reach’. EUR subsequently dropped to 1.2130 before recovering slightly to close at 1.2149 (-0.56%). While the rapid decline is oversold, there is room for EUR to test 1.2125 first before stabilization can be expected. For today, the next major support at 1.2080 is not expected to come under threat. Resistance is at 1.2180 followed by 1.2205.”
Next 1-3 weeks: “We highlighted yesterday (11 Jan, spot at 1.2185) that ‘the pullback in EUR has room to move to 1.2125’. We added, ‘odds for extension to 1.2080 are not high at this stage’. EUR subsequently dropped to 1.2130 before settling on a soft note at 1.2149 (-0.56%). The rapid pace of decline suggests that chance for EUR to move to 1.2080 has increased. Overall, the current downward pressure in EUR is deemed intact as long as it does not move above 1.2250 (‘strong resistance’ level was at 1.2280 yesterday).”