FX Strategists at UOB Group do not rule out a breakdown of the critical support at 1.1500 the figure in the near term.
Key Quotes
24-hour view: “Expectation for sideway trading yesterday was wrong as EUR slumped to an overnight low of 1.1539. The strong decline appears incomplete but in view of the already oversold conditions, any weakness could be checked by last week’s low near 1.1505/10 (minor support is at 1.1530). Resistance is at 1.1590 but only a break above 1.1620 would indicate that the current weakness has stabilized. Higher up, yesterday’s peak at 1.1672 is not expected to come into the picture for now”.
Next 1-3 weeks: “Our recent expectation for a stronger rebound in EUR was proven wrong as the break of the 1.1605 ‘key support’ yesterday resulted in a sharp drop to a low of 1.1539. From here, market is clearly eyeing the 1.1505/10 support as this level was tested twice in recent weeks but held (low of 1.1506 in late May and 1.1507 last week). The weakened undertone suggests that a break below this level would not be surprising but at this stage, the prospect for a period of sustained weakness in EUR below this strong support does not appear to be high (indicators have yet to fully unwind from oversold levels). All in, we expect EUR to stay under pressure, especially within the next several days and a break of 1.3505/10 could lead to a move to 1.3460. On the upside, the ‘key resistance’ is at 1.1670 even though a break above 1.1620 would indicate that the current fledgling downward pressure has eased”.
Share
