EUR/USD still neutral, likelihood for further downside – UOB

FX Strategists at UOB Group noted the pair keeps the neutral outlook in the near term while it is expected to retest lower levels in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that the decline in EUR “appears to have enough momentum to dip below last week’s 1.1527 low but a clear break of 1.1500 seems unlikely”. While EUR touched 1.1524, the subsequent sharp and rapid swing higher from the low came as a surprise. From here, the strong up-move has scope to move above the overnight high of 1.1615 but a break of last week’s top of 1.1659 is not expected (1.1640 is already a strong level). On the downside, support is at 1.1565 but the stronger level is closer to 1.1540. The 1.1524 low is unlikely to come into the picture for today”.

Next 1-3 weeks: “EUR dipped below last week’s 1.1527 low and touched 1.1524 yesterday before staging a surprisingly robust recovery. Despite the strong bounce, we continue to detect a weak underlying tone and see chance for EUR to probe the bottom of the expected 1.1470/1.1640 consolidation range. At this stage, a clear break below 1.1470 seems unlikely. All in, the outlook for EUR remains as neutral and even if there is a break above 1.1640, we do not expect any gains to be sustained”.