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FX Strategists noted the downside momentum has started to pick up pace in EUR/USD.

Key Quotes

24-hour view: “Yesterday, we held the view that EUR ‘could drift lower but the major support at 1.1750 is not likely to come into the picture’. While the major support remains intact (low of 1.1764), the pace of the decline was more rapid than anticipated. From here, a breach of 1.1750 would not be surprising but in view of the oversold conditions, it is left to be seen if EUR can maintain a foothold below this level (next support is at 1.1720). Overall, only a move back above 1.1810 (minor resistance is at 1.1790) would indicate the current weakness in EUR has stabilized.”

Next 1-3 weeks: “Last Thursday (03 Sep, spot at 1.1830), we indicated that EUR ‘has moved into a consolidation phase but is likely to test the bottom of the expected 1.1750/1.1950 range first’. After a few days, EUR is approaching 1.1750 as it dropped to an overnight low of 1.1764. Downward momentum is beginning to improve albeit not by much. While a breach of 1.1750 would not be surprising, EUR has to close below this level before a sustained decline can be expected. To look at it another way, a daily closing below 1.1750 could lead to a move towards the next major support at 1.1660. For now, the prospect for such a scenario is not high but it would increase quickly within these few days unless EUR moves back above 1.1845.”