UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang note EUR/USD could revisit the 1.0700 region once 1.0750 is cleared.
Key Quotes
24-Hour View: “Our view was wrong for the EUR to trade sideways yesterday as it fell to 1.0758, the same low as last week. Downside momentum has improved but a clear break below key support at EUR 1.0750 is needed before a sustained decline is likely. That said, the next major support at 1.0700 is unlikely to be seen today. The risk of a clear EUR break below 1.0750 remains intact until it remains below 1.0805 (minor resistance at 1.0785).
Next 1-3 weeks: “We have held a negative EUR outlook for two weeks now. In our latest detail from two days ago (May 22, spot at 1.0820), we indicated that the probability of a clear break below EUR 1.0750 has decreased. We added, ‘only a break above 1.0860 would indicate that EUR weakness has stabilised’. Yesterday, the EUR fell to a low of 1.0758. Downward momentum has improved, though not by much. EUR needs to crack 1.0750 in these 1 to 2 days to drop further to 1.0700. If the EUR breaches 1.0835 (the ‘strong resistance’ level previously at 1.0860) it would suggest that it is not weakening further.”
