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In opinion of FX Strategists at UOB Group, EUR/USD has increased the probability of a deeper pullback to the 1.0945 level.

Key Quotes

24-hour view: “We highlighted yesterday that ‘a breach of the solid 1.0980/90 support zone could potentially lead to a rapid drop to 1.0955’. While the anticipation for a breach of the support zone was not wrong, the subsequent decline did not quite reach 1.0955 (overnight low of 1.0963). The rapid drop appears to be overstretched but there is scope for EUR to test 1.0955 first before a recovery can be expected. Resistance is at 1.1000 followed by 1.1020.”

Next 1-3 weeks: “We detected the pick-up in downward momentum yesterday (06 Feb, spot at 1.1000) and highlighted that ‘the solid 1.0980/90 support zone is vulnerable’. EUR subsequently cracked the support zone and dropped to a low of 1.0963. Downward momentum has improved further and from here, barring a move above 1.1040 (‘strong resistance’ was at 1.1055 yesterday), EUR is expected to move towards 1.0945. Looking ahead, the support below 1.0945 is at 1.0910.”

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