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FX Strategists at UOB Group stay neutral on the pair, adding that a breach of 1.1450 should allow for a test of 1.1390 in the near term.

Key Quotes

24-hour view: “Expectation for EUR to trade sideways yesterday was wrong as it edged below last week’s 1.1462 low and touched 1.1457 before rebounding strongly. While lackluster momentum suggests low risk of a break of the major 1.1450 support level, it is too soon to expect a sustained period of EUR strength. EUR is more likely to consolidate and trade sideways for today; likely between 1.1460 and 1.1530. In the event of a break of the major 1.1450 support, EUR could drop sharply and quickly to the next support at 1.1420″.

Next 1-3 weeks: “We have held the same view since last Thursday (04 Oct, spot at 1.1480) wherein a “break of 1.1450 would shift the focus to 1.1390″. EUR subsequently touched 1.1462 but was not able to make much headway on the downside. We indicated yesterday (08 Oct, spot at 1.1525) that while the outlook for EUR is still ‘negative’, the “prospect for a move to 1.1450 have diminished” and warned that EUR “should head lower soon or the risk of a short-term bottom would increase quickly”. EUR edged below last week’s 1.1462 low and touched 1.1457 during late London hours yesterday but the decline was short-lived. The price action suggests that 1.1450 is acting as solid support and may not yield so easily. That said, only a break of the 1.1580 ‘key resistance’ (no change in level) would indicate that a short-term bottom is in place. Until then, there is still chance that EUR could break 1.1450 but time is not on the side for those looking for a move to 1.1390″.