FX Strategists at UOB Group expect EUR/USD to trade on a bearish fashion, although a breach of 1.0980 looks unlikely in the near-term.
24-hour view: Instead of ‘trading sideways’, EUR eked out a fresh 2-month low of 1.0990 before recovering quickly. Despite making fresh low, the price action lacks momentum and the downside risk appears to be limited. From here, we continue to expect EUR to trade sideways, likely between 1.0995 and 1.1040.”
Next 1-3 weeks: “While EUR registered a lower low for the sixth straight day as it touched 1.0990 yesterday (29 Jan), downward momentum has not improved by all that much. Our view from Tuesday (28 Jan, spot at 1.1020) wherein ‘EUR could continue to edge lower but any weakness is expected to encounter solid support near last November’s low near 1.0980’ is still valid. EUR has to move above 1.1070 (‘strong resistance’ level previously at 1.1085) in order to indicate that the recent weakness has stabilized. Until then, a breach of 1.0980 is not ruled out but only a NY closing below this level would suggest that EUR is ready to tackle 1.0945, possibly the 2019 low of 1.0875.”