EUR/USD: Likely to trade in a higher range of 1.1685/1.1735 – UOB Group
|The firmer underlying tone suggests Euro (EUR) is likely to trade in a higher range of 1.1685/1.1735. In the longer run, rapid improvement in downward momentum is likely to continue to weigh on EUR; the risk of a break below 1.1610 has increased, UOB Group's FX analysts Quek Ser Leang and Peter Chia note, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Downward momentum is likely to continue to weigh on EUR
24-HOUR VIEW: "EUR fell sharply last Thursday. On Friday, we highlighted the following: 'While the decline is deeply oversold, there is no sign of stabilisation just yet. Today, as long as EUR holds below 1.1715 (minor resistance is at 1.1685), there is a chance for EUR to continue to decline. That said, the major support at 1.1610 is likely out of reach for now.' Our expectations did not materialise, as EUR rebounded from a low of 1.1657 to 1.1707 before closing at 1.1701 (+0.31%). While there has been no clear increase in upward momentum, the firmer underlying tone suggests EUR is likely to trade in a higher range of 1.1685/1.1735 today."
1-3 WEEKS VIEW: "Last Thursday (25 Sep, spot at 1.1745), we stated that 'downward momentum is starting to build, and if EUR breaks and holds below 1.1715, it is likely to trigger a drop toward the next major support at 1.1670.' After EUR plummeted below 1.1670, we highlighted on Friday (26 Sep, spot at 1.1660) that 'the rapid improvement in downward momentum is likely to continue to weigh on EUR, and the risk of it breaking the major support at 1.1610 has increased considerably.' EUR subsequently recovered, but while downward momentum has slowed somewhat, only a breach of 1.1760 (no change in ‘strong resistance’ level) would indicate that the downside risk has faded."
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