EUR/USD: pair should remain undecided between 1.0980 and 1.1065 according to 2 banks

A phase of uncertainty is likely looming for the pair, as the EUR/USD was unable to break below the psychological threshold of 1.10 despite two tests on Wednesday and on Tuesday, but also doesn't seem willing to engage in a significant rebound.

In this regard, it should be noted that in a note published on Thursday, Commerzbank believes that any rebound in the EUR/USD should not exceed 1.1065:

"The pair paused just before the 30 November low at 1.0979. Just below that is another support level at 1.0957 and while we believe that this threshold will hold the initial test, it is also considered the last defense for the October low of 1.0880. Short-term rebounds are expected to end before 1.1064 and we expect a minor rebound to position us for selling".

However, on the other hand, the UOB bank said in a note released on Thursday that a break below 1.0980 is unlikely in the short term:

"Instead of 'trading sideways', the euro hit a two-month low of 1.0989 before recovering rapidly. Despite this new low, price action lacks momentum and the downside risk seems limited. From this point on, we continue to expect the euro to trade sideways, probably between 1.0994 and 1.1039″.

However, the bank doesn't rule out a further decline in the next few weeks:

"Our view that "the euro could continue to decline but any weakness should find strong support near last November's low of 1.0979" remains valid. The euro needs to move above 1.1069 (previously the "strong resistance" level of 1.1084) to indicate that the recent weakness has stabilised. In the meantime, a break of 1.0979 is not excluded, but only a U.S. close below this level would suggest that the euro is ready to tackle 1.0944, perhaps last year's low of 1.0876″.

Daily EUR/USD chart