The pair is expected to drift lower and test the mid-1.1300s in the next weeks, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “Expectation for sideway trading as wrong as EUR lurched lower and cracked a couple of strong support levels with ease. While approaching oversold territory, the sharp decline is not showing sign of stabilizing and a move below the overnight low 1.1377 seems likely. That said, any weakness could be limited to a test 1.1350. On the upside, only a break of 1.1440 would indicate that the current weakness has stabilized (minor resistance is at 1.1420)”.
Next 1-3 weeks: “We highlighted yesterday “time appears to be running out for further weakness” and the subsequent swift and sharp plunge in EUR came as a surprise, albeit a pleasant one. We have been anticipating a move to 1.1400 since last Friday (19 Oct, spot at 1.1455) wherein we indicated that the “major 1.1400 support appears to be vulnerable”. EUR tested our ‘resolve’ by holding above 1.1430 for close to a week before finally caving in. Despite yesterday’s sharp drop, we believe it is premature to expect the start of a bearish phase. However, there appears to be ample room for EUR to weaken further to 1.1350 in the coming days. The next support is obviously at the year-to-date low near 1.1300 and at this stage, the prospect for a sustained break of this level is not high. That said, as long as the ‘key resistance’ at 1.1480 (level previously at 1.1550) is intact, the odds for a fresh low would continue to increase”.
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