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EUR/USD risks a further pullback to the 1.1695 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden sharp decline in EUR that sent it plummeting to a low of 1.1730 came as a surprise (closed at 1.1769, -0.57%). While the rapid decline appears to be overdone, there is no sign of stabilization just yet. From here, there is scope to EUR to dip towards 1.1720 first before the current weakness should stabilize. Resistance is at 1.1790 followed by 1.1815.”

Next 1-3 weeks: “In our latest narrative from last Friday (18 Sep, spot at 1.1850), we held the view that ‘there is still chance, albeit a diminishing one for EUR to stage another attempt to close below 1.1750’. That said, the sudden sharp decline yesterday (21 Sep) was not exactly expected as EUR posted a loss of -0.57% and closed at a 6-week low of 1.1769. While EUR did not close below 1.1750, the rapid improvement in downward momentum suggests EUR could weaken further towards the next major support at 1.1695. A clear break of this level would indicate that the early Sep high of 1.2011 could remain in place for longer period of time. Overall, EUR is expected to stay under pressure unless it can move above the ‘strong resistance’ level at 1.1855.”