EUR/USD: the odds of a clear downward breakout by the euro remain slim (UOB)

UOB analysis of the EUR/USD:

Intraday analysis

On Wednesday, we stressed that "the weakness of the EUR/USD could first test 1.1270 before we can hope for a recovery." However, the EUR only briefly plunged to 1.1284 before recovering quickly. The downward pressure eased somewhat and the current move is considered part of a consolidation phase. In other words, we expect the euro to likely trade between 1.1270 and 1.1330 right now.

Short term analysis

The EUR/USD briefly dipped on Wednesday to 1.1254 before recovering at end the day at a level virtually unchanged at 1.1305 (-0.01%). The price action reinforces our view that "the euro will probably remain on the defensive, but the sluggish momentum suggests that the euro is unlikely to reach its low of last month at 1.1230" (see Wednesday's report, 6 March). Overall, only a move above 1.13880 would indicate that the slight downward pressure on the EUR has eased. In the future, assuming a "clear" break of 1.1230, this would significantly increase the risk of falling below the 2018 floor at 1.1213 (the next major support level in the medium and long term will be at 1,1120).