EUR/USD points to further consolidation – UOB

Spot is likely to extend its rangebound patter in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

“We have held the same view since last Friday (26 Jan) wherein the rally in EUR is “taking a pause” and EUR is expected to “consolidate for the next few days”. In line with expectation, EUR has been trading mostly sideways since then but the consolidation phase is taking longer than expected. In order to maintain the current bullish momentum, EUR has to stage the next ‘leg’ higher soon (say by end of this week) or the risk of an interim top would grow quickly. To put it another way, the longer EUR stays below the last week’s 1.2536 top, the higher the risk of an interim top. Looking further ahead, a break of 1.2536 would shift the focus to 1.2570 followed by 1.2660”.

“On the downside, the ‘stop-loss’ level for the current bullish phase that started about 3 weeks ago remains unchanged at 1.2290. On a shorter-term note, a break of 1.2335 would serve as an early indication that a top is close by”.