EUR/USD risks a move below 1.1800 – UOB
|FX Strategists at UOB Group noted EUR/USD could extend the leg lower to the sub-1.1800 area in the next weeks.
Key Quotes
24-hour view: “Yesterday, we expected EUR to ‘trade sideways within a 1.1835/1.1885 range’. We did not anticipate the rapid increase in volatility as EUR rose briefly to 1.1894 before plunging to 1.1805. While the rapid drop appears to be running ahead of itself, strong downward momentum suggests that a break of the major support at 1.1800 would not be surprising. However, the next support at 1.1780 is likely out of reach for now. On the upside, a breach of 1.1865 (minor resistance is at 1.1850) would indicate that the current weakness has stabilized.”
Next 1-3 weeks: “We turned negative on EUR last Thursday (01 Jul, spot at 1.1855) where we indicated that EUR ‘is expected to trade with a downward bias towards 1.1800’. After EUR rebounded from 1.1805, we highlighted on Monday (05 Jul, spot at 1.1860) that ‘the prospect for EUR to move below 1.1800 has diminished’. We added, ‘in order to rejuvenate the current flagging momentum, EUR has to move and stay below 1.1835 within these 1 to 2 days’. That said, we did not quite anticipate the sharp overnight drop to 1.1805. Downward momentum has been rejuvenated and a break of 1.1800 would open up the way for EUR to weaken to 1.1780. The current weakness is deemed intact as long as EUR does not move above 1.1895 (‘strong resistance’ level was previously at 1.1915).”
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