EUR/USD now risks a deeper pullback – UOB
|In light of the recent price action, EUR/USD could now edge lower and retest the 1.0200/1.0100 levels in the next weeks, noted FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.
Key Quotes
24-hour view: “Our view for USD to consolidate yesterday was incorrect as it lurched lower, cracked the critical support at 1.0350 and nose-dived to 1.0233 before closing lower by a whopping 1.49% (NY close of 1.0266). The decline of 1.49% is the largest 1-day drop since Mar 2020. While deeply oversold, the weakness has not stabilized. Only a break of 1.0340 (minor resistance is at 1.0300) would indicate that the weakness has stabilized. Until then, there is scope for EUR to weaken further to 1.0200 (minor support is at 1.0235).”.
Next 1-3 weeks: “We turned negative in EUR last Thursday (30 Jun, spot at 1.0445). After EUR dropped to 1.0365 and rebounded, we highlighted yesterday (05 Jul, spot at 1.0435) that ‘downward momentum has slowed somewhat and the odds for EUR to move to 1.0350 have diminished’. We did not quite expect the sudden lurch lower as EUR plunged and cracked 1.0350. The break of the critical support sent EUR nose-diving to 1.0233. The break of the critical support at 1.0350 amidst solid downward momentum is likely to lead to further EUR weakness. The levels to focus on are the round-number supports of 1.0200 and 1.0100. Further decline to parity (1.0000) is not ruled out but this level may be out of reach this time round. Overall, only a break of 1.0380 (‘strong resistance’ level was at 1.0500) yesterday would indicate the current downward pressure has eased.”
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