EUR/USD still faces downside risks – UOB

FX Strategists at UOB Group still believe EUR/USD could be headed for lower levels in the next weeks.

Key Quotes

24-hour view: “EUR was largely sideways overnight in a small range above 1.11. Our view of a mild upside towards 1.1150 (high: 1.1144) panned out as expected. Now, with upside momentum underwhelming, it appears that EUR may have lost its aspirations to propel higher. So, a sideways pattern would more likely preside today, between 1.1105 and 1.1150.”

Next 1-3 weeks: “Downward momentum has improved further and the risk for EUR is still on the downside. However, the mid-Dec low near 1.1065 is a major support and at this stage, the prospect for a sustained decline below this level is not high. Overall, EUR is expected to remain on the back foot unless it can move above 1.1175 (‘key resistance’ level was at 1.1195 yesterday). Looking ahead, even if EUR were to break below 1.1065, any further weakness is expected to encounter solid support at 1.1030 followed by 1.1000. In other words, we do not consider the current weakness in EUR as part of a major downtrend.”