EUR/USD could still visit 1.2165 – UOB

According to FX Strategists at UOB Group, there is still room for a test of the 1.2165 area in the near term.

Key Quotes

24-hour view: “In line with expectation, EUR extended its decline but did not have enough momentum to challenge the solid support highlighted at 1.2200/05 yesterday. The sharp rebound from a low of 1.2210 suggests that a temporary bottom is in place. The recovery has scope to extend higher but at this stage, any up-move is likely limited to 1.2300 (next resistance is at 1.2340). Support is at 1.2230 followed by the still very solid level of 1.2200/05”.

Next 1-3 weeks: “We turned neutral on Tuesday (06 Feb, spot at 1.2375) and were of the view that EUR “has moved into a correction phase” and that the pullback has “room to extend lower towards 1.2300”. While the price action since then is in line with our expectation, the pace and ease of which the strong 1.2300 level was taken out came as a surprise (overnight low has been 1.2245). At this stage, it appears to be premature to expect the start of a major bearish reversal but in view of the multi big-figure rally since the end of last year, a deeper correction towards 1.2165 would not be surprising. The correction could potentially extend all the way towards the strong ‘cluster of supports’ near 1.2100. A clear break of 1.2100 would suggest that last month’s 1.2536 high is a more important and ‘longer-lasting’ top than currently expected. Overall, while the outlook for EUR/USD is still viewed as neutral, this pair is expected to continue to stay under pressure over the next several days unless it can reclaim 1.2410. On a shorter-term note, 1.2340 is already a strong resistance”.