EUR/USD faces further consolidation – UOB

The outlook on EUR/USD remains bullish for the time being, although it could attempt some consolidation in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “EUR traded at a higher range than anticipated but the price action is still deemed as part of an on-going consolidation phase. That said, there is scope for a deeper pull-back but any weakness is viewed as part of a 1.2360/1.2460 sideway trading range and not the start of a major reversal”.

Next 1-3 weeks: “We highlighted that the next ‘target’ above 1.2440 is at 1.2570 followed by 1.2660. EUR blast past 1.2440 and hit a high of 1.2536. The subsequent rapid and sharp drop from the high was unexpected and the largely unchanged daily closing in NY has resulted in a ‘doji’. While a ‘doji’ formation does not bode well for further EUR strength, it is too early to expect a bearish reversal. Only a break of 1.2290 (‘stop-loss’ level unchanged) would indicate that the bullish phase that started last Monday has ended. In the meanwhile, the rally in EUR is likely taking a pause and the current movement is viewed as the start of a consolidation phase that may last for a few days. In other words, EUR is expected to trade sideways for now, likely between 1.2290 and 1.2500”.