Further decline could see EUR/USD slip back to the 1.0430 region in the near term, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.
Key Quotes
24-Hour View: While we expected the EUR to decline yesterday, we think that “major support at 1.0515 is unlikely to be visible.” We did not expect sharp selling as the EUR broke below 1.0515 and fell within a few pips of the year low of 1.0482 (NY low of 1.0486). The sharp drop was severely oversold, but did not stabilize. EUR has room to drop further to 1.0470 before stabilization is likely. At this time, we think that the next support at 1.0430 is unlikely to be visible. Resistance at 1.0530; If the EUR breaks above 1.0555, it will mean the weakness has stabilized.
Next 1-3 weeks: Last Thursday (21 Sep, spot at 1.0655), we highlighted that “EUR is likely to trade in a range of 1.0590/1.0730.” We added, “if it breaks below 1.0590, it will likely lead to a sustained decline to 1.0515.” After EUR broke below 1.0590, in our latest narrative from two days ago (26 Sep, spot at 1.0590), we pointed out that the price action suggests that EUR “is likely to weaken to 1.0515 in the coming days.” Yesterday (27 Sep), EUR broke below 1.0515 and dropped to a low of 1.0486. The price action continues to suggest EUR weakness. The next level to watch is at 1.0430. On the upside, a breach of 1.0585 (‘strong resistance’ level was at 1.0650 previously) would indicate that EUR is not weakening further.
