UOB Group’s FX Strategists noted EUR/USD risks a deeper pullback to the 1.1800 area in the near-term.
24-hour view: “While we expected EUR to weaken last Friday, we were of the view that ‘any weakness is unlikely to threaten the major support at 1.1910’. However, EUR declined more than expected as it cracked 1.1910 and dropped to 1.1892. The swift and sharp decline appears to be running ahead of itself but the current weakness is not showing signs of stabilization just yet. There is room for EUR retest the 1.1890 level before a more sustained recovery can be expected. For today, the next support at 1.1850 is unlikely to come into the picture. On the upside, a break of 1.1975 would indicate the current weakness has stabilized (minor resistance is at 1.1945).”
Next 1-3 weeks: “We have held a negative view in EUR since the start of the month. As EUR declined as expected, in our latest narrative from last Friday (05 Mar, spot at 1.1965), we highlighted that ‘the focus has shifted to the major support at 1.1910’. Our view was correct as EUR breached 1.1910 and dropped to 1.1892 during NY hours on Friday. The outlook for EUR remains negative and further losses to 1.1800 would not be surprising. Only a break of 1.2020 (‘strong resistance’ level was at 1.2055 last Friday) would indicate the current negative phase in EUR has run its course.”