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In opinion of FX Strategists at UOB Group, the recent bullish phase in spot could have ended.

Key Quotes

24-hour view: “We expected EUR to weaken yesterday but the ease of which it took the strong 1.1690 support and the subsequent sharp drop came as a surprise. While the decline appears to be running ahead of itself, there is no sign of stabilization just yet and further weakness to 1.1600 seems likely. At this stage, we do not anticipate a sustained move below the next support at 1.1575. On the upside, 1.1690 is expected to be strong enough to cap any intraday rebound (minor resistance is at 1.1665)”.

Next 1-3 weeks: “We warned yesterday (27 Sep, spot at 1.1750) that the “odds for further EUR strength have diminished” and added “unless EUR can move and stay above 1.1800 within these 1 to 2 days, the risk will shift slowly to the downside and a break of the 1.1690 ‘key support’ would not be surprising”. EUR subsequently broke below 1.1690 during late Asian hours and plummeted to an overnight low of 1.1635. The break of the ‘key support’ indicates that the ‘positive’ phase in EUR that started two weeks ago (14 Sep, spot 1.1690) has ended. The 1.1815 high seen on Monday (14 Sep) is deemed as a short-term top and in view of the strong pick-up in downward momentum; the current weakness in EUR has room to extend lower in the coming days. While EUR is expected to stay under pressure in the coming days, it is premature to expect the start of a bearish phase. From here, we see scope for EUR to extend its decline but the major 1.1530 support could be out reach. On the upside, only a break of 1.1730 would indicate that the current soft patch in EUR has stabilized”.