EUR/USD: Consolidation likely in the near-term – UOB

In opinion of FX Strategists at UOB Group, EUR/USD is likely to enter a consolidative phase in the short-term, while strong resistance remains at 1.2185.

Key Quotes

24-hour view: “We highlighted yesterday that EUR ‘could break the major resistance at 1.2115’. We added, ‘overbought conditions suggest it may not be able to maintain a foothold above this level and the next resistance at 1.2145 is unlikely to come into the picture’. Our view was not wrong as EUR rose to 1.2116 before pulling back quickly. Upward momentum has waned and this coupled with still overbought conditions suggest EUR is unlikely to strengthen further. The current movement is viewed as part of a consolidation and EUR is likely to trade sideways between 1.2050 and 1.2105 for today.”

Next 1-3 weeks: “Yesterday, we highlighted that ‘a break of 1.2115 would not be surprising’ and that ‘the next major resistance is at 1.2185’. EUR subsequently advanced one pip above 1.2115 (high of 1.2116) before retreating quickly. Overbought shorter-term conditions could lead to a couple of days of consolidation first. Looking ahead, the next major resistance is at 1.2185. On a shorter-term note, 1.2145 is already quite a strong level. Overall, the positive phase that started about 3 weeks ago is deemed intact as long as EUR does not move below 1.2020 (no change in ‘strong support’ level).”