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FX Strategists at UOB Group noted further weakness in EUR/USD is not ruled out in the near term.

Key Quotes

24-hour view: “While we expected EUR to weaken last Friday, we were of the view that ‘a clear break of the major long-term support at 1.1855 would come as a surprise’. However, EUR cracked 1.1855, dropped to 1.1845 before rebounding quickly. Despite the breach of 1.1855, downward momentum has not improved by all that much. There is room for EUR to dip to 1.1835; the next support at 1.1800 is likely out of reach. On the upside, a break of 1.1920 (minor resistance at 1.1900) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “We highlighted last Friday, (18 Jun, spot at 1.1915) that risk remains on the downside and the ‘focus has shifted to the next long-term support at 1.1855’. We did not quite expect the rapid manner and ease by which EUR cracked 1.1855 as it plunged to 1.1845 during NY hours. While shorter-term conditions are deeply oversold, further EUR weakness is not ruled out. That said, EUR is unlikely able to maintain the pace of its decline and it may take a while before the next support at 1.1800 comes into the picture. All in, the downside risk remains intact unless EUR can break above 1.1970 (‘strong resistance’ level was at 1.2005 last Friday).”