FX Strategists at UOB Group believe further retracements in EUR/USD should not be sustainable.
24-hour view: “We highlighted yesterday that the rapid pull-back in EUR ‘has room to extend lower but any weakness from here is viewed as part of a lower trading range of 1.1815/1.1880’. EUR subsequently rose a couple of pips above the expected range (high of 1.1882) before dropping sharply to a low of 1.1785 during NY hours. Downward momentum has improved albeit not by much. While EUR could weaken from here, a break of the major support at 1.1750 appears unlikely for now (next support is at 1.1710). Resistance is at 1.1820 followed by 1.1855.”
Next 1-3 weeks: “We have held the same view since last Friday (11 Sep, spot at 1.1825) wherein EUR is in a consolidation phase and is expected to trade between 1.1750 and 1.1920. EUR rose to a high of 1.1899 on Tuesday (15 Sep) but has since retreated. Downward momentum is beginning to improve and from here, EUR is deemed to be under mild downward pressure and could dip below 1.1750. That said, any weakness may not be sustained. On the upside, a move above 1.1885 would indicate the current mild downward pressure has eased. Looking forward, EUR has to close below 1.1750 before a move towards 1.1680 can be expected.”