FX Strategists at UOB Group see EUR/USD risking a move to the mid-1.1700s in the next weeks.
Key Quotes
24-hour view: “We highlighted yesterday that ‘the rapid decline appears to be overdone but there is room for EUR to test the 1.1800 support first before a recovery can be expected”. We added, “the next support at 1.1770 is unlikely to come into the picture’. Our view was not wrong as USD dipped to 1.1787 before rebounding quickly. The underlying tone has firmed somewhat with the bounce from the low and EUR could edge higher from here. That said, any advance is viewed as part of a 1.1800/1.1895 range (a sustained advance above 1.1895 is not expected).”
Next 1-3 weeks: “We noted yesterday (02 Sep, spot at 1.1925) that ‘upward momentum has been sluggish and EUR has to move and stay above 1.1975 within these couple of days or a break of 1.1830 would indicate the current upward pressure has eased’. That said, we did not quite anticipate the speed by which EUR took out 1.1830 (EUR dropped to an overnight low of 1.1820). The price actions suggest that the positive phase that started earlier this week (see annotations in the chart below) lasted only for a few days. From here, EUR is deemed to have moved into a consolidation phase. That said, the weakened underlying tone suggests it is likely to test the bottom of the expected 1.1750/1.1950 consolidation range first.”
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