EUR/USD: Chance of dropping below 1.1540 – UOB Group
|Oversold weakness has not stabilised; Euro (EUR) could drop below 1.1540. The next support at 1.1490 is unlikely to come into view. In the longer run, the outlook for EUR remains negative; it could decline further toward 1.1490, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Outlook for EUR remains negative
24-HOUR VIEW: "Two days ago, EUR dropped to a low of 1.1597 and then rebounded. In the early Asian session yesterday, we stated that 'the rebound from oversold conditions suggests that instead of continuing to decline, EUR is more likely to trade in a range today, expected to be between 1.1600 and 1.1660.' However, instead of trading in a range, EUR fell sharply, reaching a low of 1.1541. Conditions remain oversold, but with no signs of stabilisation just yet, EUR could drop below 1.1540. The next support at 1.1490 is unlikely to come into view today. On the upside, any recovery is likely to stay below 1.1615, with minor resistance at 1.1595."
1-3 WEEKS VIEW: "Yesterday (09 Oct, spot at 1.1630), we reiterated our negative EUR view. We highlighted that 'the risk for EUR remains on the downside, likely toward the major support at 1.1570.' We also highlighted that 'oversold conditions could lead to a couple of days of consolidation first.' We underestimated the strength of the downward momentum, as EUR plummeted to a low of 1.1541 and closed lower for the fourth straight day (1.1563, -0.54%). The outlook for EUR remains negative, and it could decline further toward 1.1490. Overall, only a breach of 1.1655 (‘strong resistance’ level was at 1.1695 yesterday) would indicate that the weakness that started earlier this week has stabilised."
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