EUR/USD and GBP/USD both likely to enter into a consolidation phase (UOB)

After having dropped sharply, the euro and the pound are both recovering. With this in mind, here's what UOB bank thinks (that the two pairs will stop their decline and enter in a consolidation phase):

UOB analysts see the eurodollar pair entering into a consolidation phase in the range of 1.0770 to 1.0990.

"The euro traded between 1.0804 and 1.0870 on Monday, relatively close to our expected sideways trading range of 1.0800/1.0875. The current move is seen as a consolidation phase, although the strength of the underlying tone suggests a higher trading range of 1.0820/1.0880." The euro's current movement is seen as a consolidation phase in progress, although the strength of the underlying tone suggests a higher trading range between 1.0820/1.0880.

Looking to the weeks ahead, "the break in the "strong resistance" level at 1.0845 indicates that the phase of euro weakness that began earlier this month is over. From this point on, the euro is considered to have entered a consolidation phase and is expected to trade sideways within a relatively wide range of 1.0770/1.0900."

Regarding the GBP/USD, UOB says: "Our forecast for the pound's return to last Friday's high of 1.2979 was erroneous, as it fell to a low of 1.2888 before rebounding quickly. Price action is seen as a consolidation phase and the pound is expected to trade sideways for the time being, probably between 1.2886 and 1.2959".

In the longer term, "Last Thursday's downward pressure (the pair traded at 1.2919) ended abruptly when the pound rebounded above the "strong resistance" level of 1.2959 (peaking 1.2979). For now, last week's low of 1.2850 is considered a temporary low and the current price action is probably part of a consolidation phase. In other words, the pound is expected to trade sideways between 1.2849 and 1.3029 for the time being."