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While risks point to further downside, EUR/USD is likely to meet a tough support around 1.0980, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “While EUR dipped to a 2-month low of 1.1008, it recovered to end the day little changed at 1.1016 (-0.06%). Downward momentum is patchy at best and EUR is unlikely to weaken much further. That said, it is too early to expect a recovery. EUR is more likely to trade sideways at these lower levels, expected to be within a 1.1000/1.1050 range.”

Next 1-3 weeks: “While we have held the view that EUR is in a ‘corrective pullback’ since early this month we held the view that lackluster momentum suggests EUR could ‘stabilize ahead of 1.1030’. EUR cracked 1.1030 last Thursday (23 Jan) and extended its decline to 1.1008 yesterday (27 Jan). While downward momentum has picked up, the current decline is approaching oversold territory. That said, the risk remains on the downside and only a move above the ‘strong resistance’ at 1.1085 would indicate that the current weakness has stabilized. Until then, EUR could continue to edge lower but any weakness is expected to encounter solid support near last November’s low near 1.0980. Looking ahead, if EUR were to register a daily closing below 1.0980, it could open up the way for further weakness towards 1.0945, possibly retesting 1.0875, the low in 2019.”