According to FX Strategists at UOB Group, further declines in EUR/USD should meet solid contention in the 1.1030 region.
Key Quotes
24-hour view: “EUR surprised with a drop to as low as 1.1035 overnight, vs our view of ‘a sustained decline below 1.1065 is unlikely’. With the impulsive move, EUR is vulnerable to further losses. Until we see a recovery above 1.1080 (a key resistance), further declines to the key support of 1.1000 cannot be dismissed. Before 1.1000, strong support is already seen at 1.1030.”
Next 1-3 weeks: “While EUR has dipped below the strong 1.1065 support overnight, the current weakness is not viewed as part of a trending down-move and the next support at 1.1030 is likely strong enough to hold any further decline. Taking a step back, we have noted on 03 Jan that EUR “is likely in the early stages of a corrective pullback”. From here, the pullback has room to extend lower but lackluster momentum suggests EUR could stabilize ahead of 1.1030. Only a clear break of 1.1030 would increase the risk of a more sustained decline. On the upside, a move above 1.1150 (no change in ‘strong resistance’ level) would suggest the current weakness has stabilized.”
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