In opinion of FX Strategists at UOB Group, EUR/USD risks a deeper pullback below the 1.1975 level in the next weeks.

Key Quotes

24-hour view: “Our expectation for EUR to ‘edge higher’ last Friday was incorrect as it plunged through a few strong support levels with ease (low has been 1.2015). The sharp and rapid drop is oversold but there is room for a test of 1.2000 first before the current weakness should stabilize. The next support at 1.1975 is unlikely to come under threat. Resistance is at 1.2050 followed by 1.2075.”

Next 1-3 weeks: “In our latest narrative from last Thursday (29 Apr, spot at 1.2135), we indicated that ‘the positive phase in EUR is still intact but in view of the overbought conditions, EUR may find it hard to break the major resistance at 1.2185’. However, we did not quite expect the sudden sharp drop on Friday that took out our ‘strong support’ level at 1.2050 (low of 1.2015). The break of the ‘strong support’ indicates that the positive phase that started in early April has run its course. From here, the near-term bias is tilted to the downside but EUR has to break the major support at 1.1975 before a more sustained (and sizeable) pullback can be expected. At this stage, the prospect for a break of 1.1975 is not high but it would increase unless EUR moves above 1.2105 within these few days.”