EUR/USD is likely to test the lower bound of the 1.1750-1.1950 range in the next weeks, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “While we noted yesterday that ‘upward pressure has more or less dissipated’, we expected EUR to ‘consolidate within a 1.1875/1.1975 range’. However, EUR plummeted to a low of 1.1820 before ending the day on a soft note at 1.1853 (-0.48%). The rapid decline appears to be overdone but there is room for EUR to test the 1.1800 support first before a recovery can be expected. For today, the next support at 1.1770 is unlikely to come into the picture. Resistance is at 1.1865 followed by 1.1890.”
Next 1-3 weeks: “We noted yesterday (02 Sep, spot at 1.1925) that ‘upward momentum has been sluggish and EUR has to move and stay above 1.1975 within these couple of days or a break of 1.1830 would indicate the current upward pressure has eased’. That said, we did not quite anticipate the speed by which EUR took out 1.1830 (EUR dropped to an overnight low of 1.1820). The price actions suggest that the positive phase that started earlier this week lasted only for a few days. From here, EUR is deemed to have moved into a consolidation phase. That said, the weakened underlying tone suggests it is likely to test the bottom of the expected 1.1750/1.1950 consolidation range first.”
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