EUR/USD moved into a consolidation phase – UOB

The pair is now seen neutral and within a consolidative range in the short-term horizon.

Key Quotes

24-hour view: “We expected EUR to “probe the next resistance at 1.1990” yesterday but were of the view that “a sustained move above this level is not expected”. EUR subsequently touched a high of 1.1996 before staging a surprisingly sharp and rapid pull-back. The decline from the high appears to have room to extend lower but 1.1890 is a solid support and this level would not be easy to crack (the next support is at 1.1850). On the upside, only a move back above 1.1975 would indicate that the current weakness has stabilized (minor resistance is at 1.1955)”.

Next 1-3 weeks: “In last Friday’s update (11 May, spot at 1.1920), we highlighted “the diminished odds for further EUR weakness” and the subsequent break of the ‘stop-loss’ at 1.1960 confirms that the bearish phase that started earlier this month has ended. The outlook for EUR is deemed as neutral now and last week’s 1.1821 low is viewed as a short-term bottom. To look at it another way, the decline that started in mid-April from a high of 1.2413 has likely found a base at 1.1821 and from here, we believe EUR has moved into a consolidation/correction phase. That said, the immediate bias is tilted to the upside even though any advance is viewed as part of a 1.1850/1.2050 correction/consolidation phase and not the start of a bullish reversal”.