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FX Strategists at UOB Group noted EUR/USD could attempt a move to levels below the 1.10 mark in the near-term.

Key Quotes

24-hour view: “Expectation for EUR to ‘trade sideways’ was incorrect as it plummeted to an overnight low of 1.0992. The sharp decline appears to be running ahead of itself but a breach of the solid 1.0980/1.0990 support zone could potentially lead to a rapid drop towards 1.0955. Overall, EUR is expected to stay on the back foot unless it can move back above 1.1030.”

Next 1-3 weeks: “We highlighted yesterday (05 Feb, spot at 1.1045) that ‘unless EUR recover soon, current price action looks more akin to be part of a consolidation phase instead of a strong rebound’. While the subsequent breach of the ‘strong support’ level at 1.1015 was not surprising, the relatively sharp decline of -0.40% (NY close of 1.0997) was not expected. Downward momentum has picked up and the strong support zone between 1.0980 and 1.0990 is vulnerable. A break of these solid levels would increase the odds for a move below the mid-term support at 1.0945. Overall, the current nascent pick up in downward momentum is likely to gather pace unless EUR can move above 1.1055 within these few days.