EUR/USD now emerges on the horizon – UOB
|In opinion of FX Strategists at UOB Group, EUR/USD could now be headed to the 1.1800 neighbourhood.
Key Quotes
24-hour view: “While we expected EUR to weaken yesterday, we were of the view that ‘a clear break of 1.1865 is unlikely’. The subsequent weakness exceeded our expectation as EUR dropped to 1.1843 before settling on a soft note at 1.1855. The decline has gathered momentum and the risk for today is still on the downside. In view of the oversold conditions, any weakness is likely limited to 1.1825. The major support at 1.1800 is not expected to come under threat. On the upside, a break of 1.1895 (minor resistance is at 1.1875) would indicate that the current downward pressure has eased.”
Next 1-3 weeks: “On Monday (28 Jun, spot at 1.1940), we held the view that the movement in EUR is part of a consolidation and we expect it to ‘trade within a 1.1865/1.12005 range’. Yesterday (30 Jun), we highlighted that ‘looking ahead, the consolidation is expected to be resolved with a fresh weak phase but EUR has to close 1.1845 before a sustained decline can be expected’. EUR subsequently dropped to 1.1843 before closing at 1.1855 (-0.34%). While we preferred a closing below 1.1845, the rapid build-up in downward momentum suggests that EUR is likely to trade with a downward bias towards 1.1800. At this stage, the odds for a sustained decline below this level are not high. All in, EUR is expected to stay under pressure unless it can move above the ‘strong resistance’ level at 1.1915.”
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