EUR/USD faces extra consolidation in the short term – UOB

In view of FX Strategists at UOB Group, EUR/USD is expected to remain sidelined for the time being.

Key Quotes

24-hour view: “The sudden pickup in volatility was unexpected as EUR reversed an initial dip to 1.1203 and surged to an overnight high of 1.1280 (before dropping quickly after NY close). The rapid swings amidst mixed momentum indicators suggest EUR could continue to trade in a choppy manner, likely within a 1.1220/1.1290 range”.

Next 1-3 weeks: “After the sharp drop on in EUR on Tuesday, we indicated on Wednesday (17 Jul, spot at 1.1210) that EUR is “expected to trade with a downside bias”. We noted the lackluster momentum and held the view that EUR “is unlikely to accelerate lower”. That said, the rapid bounce during NY hours yesterday (after dovish Fed-speak) came as a surprise. The strong 1.1260 resistance was easily breached (high of 1.1280) and the mild downward pressure has dissipated. The outlook for EUR is mixed from here and it is likely to trade sideways in an ‘undecided’ manner, likely between 1.1200 and 1.1320 range”.