EUR/USD expected to test the mid-1.1100s – UOB

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According to FX Strategists at UOB Group, EUR/USD is seen moving lower to the 1.1150 region in the short-term horizon.

Key Quotes

24-hour view: “Last Friday, we expected EUR to “test the 1.1250 support first” before “a recovery can be expected”. However, stronger than expected US retail sales data sent EUR plunging below this level as it hit 1.1200 before ending the day on a weak note at 1.1207. The sharp and rapid drop appears to be running too fast, too soon. From here, while a dip below 1.1200 seems likely, the next support at 1.1170 is unlikely to come into the picture. On the upside, EUR has to reclaim 1.1260 in order to indicate that the current weakness has stabilized (minor resistance is at 1.1240)”.

Next 1-3 weeks: “While we indicated since last Thursday (13 Jun, spot at 1.1295) that EUR “has to move and stay above 1.1335 within these 1 to 2 days or a break of the 1.1250 ‘key support’ would not be surprising”, the ease of which it sliced through 1.1250 and the subsequent plunge to 1.1200 was not expected (the subsequent 1-day decline of 0.60% is the largest in 7 weeks). The ‘positive phase’ that started on 04 Jun (spot at 1.1245) has clearly ended. The immediate bias has shifted to the downside but we do not expect the current weakness to be sustained and for the next couple of weeks, we see low chance of EUR threatening the critical 1.1100 support. That said, the current soft patch has room to test 1.1150. Only a move above 1.1290 would indicate that the current mild downward pressure has eased”.

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