FX Strategists at UOB Group noted that further losses lie ahead for EUR/USD if 1.1750 is cleared in the near-term.
Key Quotes
24-hour view: “We highlighted yesterday that ‘a breach of 1.1750 would not be surprising but in view of the oversold conditions, it is left to be seen if EUR can maintain a foothold below this level’. However, EUR did not break 1.1750 as it rebounded sharply and quickly from a low of 1.1751. Downward pressure has eased and the current movement is viewed as part of a consolidation phase. Expected range for today, 1.1765/1.1845.”
Next 1-3 weeks: “Last Thursday (03 Sep, spot at 1.1830), we indicated that EUR ‘has moved into a consolidation phase but is likely to test the bottom of the expected 1.1750/1.1950 range first’. After a few days, EUR is approaching 1.1750 as it dropped to an overnight low of 1.1764. Downward momentum is beginning to improve albeit not by much. While a breach of 1.1750 would not be surprising, EUR has to close below this level before a sustained decline can be expected. To look at it another way, a daily closing below 1.1750 could lead to a move towards the next major support at 1.1660. For now, the prospect for such a scenario is not high but it would increase quickly within these few days unless EUR moves back above 1.1845.”
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