According to FX Strategists at UOB Group, EUR/USD could recede further and re-test the mid-1.1600s in the near-term.
Key Quotes
24-hour view: “We highlighted yesterday that ‘there is chance for EUR to edge lower but any weakness is likely limited to a test of 1.1705’. We added, ‘the next support is at 1.1680’. The weakness in EUR exceeded our expectation as EUR dropped to 1.1686 before rebounding. While the decline is oversold, it is too early to expect a sustained recovery. From here, EUR is likely to test the major support at 1.1680 first before a rebound can be expected. For today, a break of the next support at 1.1650 is unlikely. Resistance is at 1.1735, the stronger level is at 1.1765.”
Next 1-3 weeks: “Two days ago (14 Oct, spot at 1.1740), we held the view that EUR ‘is still in a consolidation phase but could test the bottom of the expected 1.1680/1.1800 range’. EUR did not quite test 1.1680 as it rebounded after touching a low of 1.1686 yesterday (15 Oct). Downward momentum is beginning to improve and the bias has shifted to the downside towards the next support at 1.1650. Only a break of 1.1790 would indicate the current mild downward pressure has eased. On a shorter-term note, 1.1765 is already a strong resistance level.”
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