Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group suggest EUR/USD could slip back to the 1.0730 region in the near term.
Key Quotes
24-Hour View: We highlighted last Friday that the EUR “may break key support at 1.0790, but further support at 1.0730 is likely out of reach.” We added, “Downside risks remain intact as long as EUR remains below 1.0860 (minimum resistance at 1.0830).” In London trade, the EUR broke below 1.0790 and fell to 1.0764. In NY trade, the EUR briefly bounced back to 1.0841 and then back to 1.0764 before ending the day at 1.0800 (-0.08%). Despite falling to a fresh 2-1/2-month low, there is no clear increase in downward momentum. That said, EUR has room to retest the 1.0765 level today. Major support at 1.0730 is unlikely to come under threat. Resistance at 1.0815, followed by 1.0840.
Next 1-3 weeks: We have expected EUR to weaken since the start of last week. After EUR dropped, in our update from Friday (25 Aug, spot at 1.0870), we indicated that “the weakness in EUR is still intact as long as it stays below 1.0890.” We also indicated that “a break of 1.0790 will not be surprising, and the next level to focus on is1.0730.” In London trade, EUR broke below 1.0790 and dropped to a low of 1.0764. We continue to hold the view that EUR could decline, likely to 1.0730, even though it could consolidate for a couple of days first. We will hold the same view as long as the ‘strong resistance’ level at 1.0875 (level was at 1.0890 last Friday) is not breached.
