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A sustained break below the 1.1100 handle still remains unclear, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We noted the “improved underlying tone” yesterday and expected EUR to “probe 1.1170″. However, EUR only touched 1.1160 before trading mostly sideways. The underlying tone still appears to be slightly positive and EUR could edge above 1.1170 from here. That said, a break of the strong 1.1200 resistance is unlikely. Support is at 1.1130 followed by the still very solid level of 1.1100″.

Next 1-3 weeks: “After EUR traded within a wide range of 1.1100/1.1187 last Thursday (25 Jul), we indicated on Friday (26 Jul, spot at 1.1145) that it is “too early to tell whether EUR could move and stay below 1.1100″. We added, “EUR could consolidate and trade sideways for a few days”. From that perspective, the relatively quiet price action over the past couple of days was not surprising (EUR traded between 1.1110 and 1.1150 for the past two days). At this stage, it is still not clear whether EUR could move and stay below 1.1100. That said, the downside risk is clearly higher and only a break of the 1.1200 ‘key resistance’ (no change in level) would indicate that the recent weakness in EUR has stabilized”.