According to FX Strategists at UOB Group, the downside momentum in EUR/USD seems to be running out of steam.
24-hour view: “We noted yesterday that ‘downward momentum is patchy at best and EUR is unlikely to weaken much further’. EUR subsequently traded between 1.0996 and 1.1025, narrower than our expected sideway-trading range of 1.1000/1.1050. The current movement is still viewed as part of a sideway-trading and EUR is likely to continue to trade sideways for now. Expected range for today, 1.1000/1.1040.”
Next 1-3 weeks: “While we have held the view that EUR is in a ‘corrective pullback’ since early this month, we highlighted the lackluster momentum suggests EUR could ‘stabilize ahead of 1.1030’. EUR cracked 1.1030 last Thursday (23 Jan) and extended its decline to 1.1008 yesterday (27 Jan). While downward momentum has picked up, the current decline is approaching oversold territory. That said, the risk remains on the downside and only a move above the ‘strong resistance’ at 1.1085 would indicate that the current weakness has stabilized. Until then, EUR could continue to edge lower but any weakness is expected to encounter solid support near last November’s low near 1.0980. Looking ahead, if EUR were to register a daily closing below 1.0980, it could open up the way for further weakness towards 1.0945, possibly retesting 1.0875, the low in 2019.”