EUR/USD can edge below 1.0820 but unlikely to reach 1.0780 - UOB Group

Euro (EUR) is under mild downward pressure vs US Dollar (USD); it could edge below 1.0820 but is unlikely to reach 1.0780. In the longer run, more than week-long rally is taking a pause; EUR is likely to consolidate in a 1.0680/1.0950 range for now, UOB Group's FX analysts Quek Ser Leang and Peter Chia note. 

More than week-long rally is taking a pause

24-HOUR VIEW: "We highlighted yesterday that 'Further range trading seems likely, even though the slightly softened underlying tone suggests a lower range of 1.0850/1.0920.' However, USD dropped to 1.0820, rebounding to close lower by 0.31% at 1.0852. The decline resulted in a slight increase in downward momentum. Today, EUR has the potential to edge below 1.0820, but any further decline is unlikely to reach 1.0770. Resistance is at 1.0880; a breach of 1.0910 would suggest the current mild downward pressure has eased." 

1-3 WEEKS VIEW: "We turned positive in EUR early last week (see annotations in the chart below). In our most recent narrative from two days ago (12 Mar, spot at 1.0915), we highlighted that 'while the uptrend remains intact for now, it is worth noting that conditions are very deeply overbought.' We also highlighted that 'this suggests that while further gains are possible, the potential for additional upside may be limited.' Yesterday, EUR fell and tested our 'strong support' level at 1.0820. While the 'strong support' level has not been clearly breached yet, upward momentum has largely eased. To put it another way, the more than week-long rally is taking a pause, and the current price movements are likely part of a consolidation phase. For now, we expect EUR to trade in a 1.0680/1.0950 range. While this range may seem wide, it is not unexpected given the size of the recent rally."