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FX Strategists at UOB Group remain neutral on spot, adding that there is still scope for a test of the 1.1300 area in the near term.

Key Quotes

24-hour view: “Instead of trading sideways (as expected yesterday), EUR plummeted after the release of FOMC statement and broke a couple of strong support levels with ease (NY low of 1.1350). The rapid decline appears to be running ahead of itself but there is scope for EUR to test 1.1330 first before stabilization can be expected (the next support at 1.1300 is likely ‘safe’ for now). Resistance is at 1.1390 but only a move back above 1.1420 would indicate that the current weakness has stabilized”.

Next 1-3 weeks: “While we highlighted yesterday the “immediate bias it tilted to the downside”, the subsequent pace of decline has been much faster than expected. Not only the drop was faster than expected, EUR also cracked the strong 1.1370 support (NY low of 1.1350). The rapid and sharp turnaround from the Wednesday’s (07 Nov) peak of 1.1500 suggests there is scope for EUR to retest the major 1.1300 support in the coming days. At this stage, the prospect for a sustained move below this major support is not high (note that EUR tried to break clearly below 1.1300 in mid-August and late October but failed on both occasions). All in, we are adopting a slightly ‘negative’ stance now and expect EUR to edge lower from here. Only a move back above the 1.1450 ‘key resistance’ would indicate that the current mild downward pressure has eased”.