EUR/USD seen testing 1.1800 in the near-term – UOB

FX Strategists at UOB Group noted EUR/USD could slip back to the 1.1800 area in the next weeks.

Key Quotes

24-hour view: “While we expected EUR to weaken yesterday, we were of the view that ‘the next support at 1.1850 is unlikely to come into the picture’. We underestimated the downward momentum as EUR plummeted to a low of 1.1842. Further weakness is not ruled out but severely oversold conditions suggest EUR is unlikely able to maintain a foothold below the major support at 1.1800. On the upside, a break of 1.1900 (minor resistance is at 1.1975) would indicate the current weakness has stabilized.”

Next 1-3 weeks: “We have held a negative view in EUR since the start of the month. As EUR declined as expected, in our latest narrative from yesterday (08 Mar, spot at 1.1915), we highlighted that ‘the outlook for EUR remains negative’ and ‘further losses to 1.1800 would not be surprising’. While our view was not wrong, we did not anticipate the subsequent rapid sell-off (EUR plummeted to 1.1842 during NY session). All in, there is no change to our view as we continue to expect EUR to move lower to 1.1800. Looking ahead, a clear break of 1.1800 would shift the focus to 1.1740. Only a break of 1.1980 (‘strong resistance’ level was at 1.2020 yesterday) would indicate the current negative phase in EUR has run its course.”