The pair is seen grinding lower in the short-term horizon, according to FX Strategists at UOB Group.
Key Quotes
24-hour view: “We held the view that “a short-term top is in place” last Friday and expected “a test of the 1.1630 support”. However, the subsequent rapid and sharp drop in EUR that hit a low of 1.1583 came as a surprise. Downward momentum has improved considerably and the immediate bias is still on the downside. From here, barring a move back above 1.1650 (minor resistance is at 1.1625), we expect EUR to weaken further towards 1.1555. For today, we do anticipate the next support at 1.1625 to be threatened”.
Next 1-3 weeks: “The recent upward pressure has eased as EUR staged a surprisingly sharp decline last Friday and took out the 1.1590 ‘key support’. We indicated on Friday (31 Aug, spot at 1.1670) that a break of 1.1590 would suggest that a short-term top is in place. In other words, we do not expect EUR to move above last week’s 1.1733 peak for the next one week or so. The weakened undertone suggests EUR could drift lower from here but at this stage, we view any weakness as part of 1.1520/1.1675 consolidation range and not the start of a sustained decline”.
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