According to FX Strategists at UOB Group, EUR/USD could extend the drop below the 1.1200 handle, although the 1.1180 region is likely to hold.
Key Quotes
24-hour view: “Yesterday, we held the view EUR “could test 1.1200 but the mid-June low of 1.1180 is not expected to come into the picture for today”. EUR subsequently drifted to a low of 1.1205 before settling little changed at 1.1217 (-0.09%). The underlying tone is still of the soft side and from here, EUR could dip below 1.1200. That said, 1.1180 is still unlikely to come into the picture for now. Resistance is at 1.1230 but the stronger level is at 1.1245″.
Next 1-3 weeks: “We have held the same view last Tuesday (02 Jul, spot at 1.1285) wherein EUR “is in a sideway-trading phase” but we added, “the soft underlying tone suggest the immediate bias is tilted to the downside”. However, the expected ‘solid support’ at 1.1220 (bottom of the expected 1.1220/1.1340 range) did not materialize as EUR crashed to a low of 1.1205 last Friday (05 Jul). Downward momentum has improved even though not by as much as we would like. From here, EUR is expected to trade with a ‘downside bias’ towards the midJune low near 1.1180. A dip below this level is not ruled out but at this stage, the risk for a break of the year’s low at 1.1106 is not high. On the upside, only a move above the strong resistance at 1.1290 would indicate the current downward pressure has eased”.
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