According to FX Strategists at UOB Group, the correction in EUR/USD could extend to the 1.1110 region in the next weeks.
Key Quotes
24-hour view: “We highlighted yesterday, the recovery in EUR ‘lacks momentum’ but were of the view that ‘there is room for EUR to edge higher’. Instead of edging higher, EUR surrendered all of Monday’s gain as it dropped to an overnight low of 1.1131. While downward momentum has not improved by much, the risk is on the downside and EUR could test the strong 1.1110 support (the overnight low is acting as a minor support). At this stage, the prospect for a sustained decline below this level is not high. Resistance is at 1.1170 followed by 1.1195.”
Next 1-3 weeks: “As highlighted, any weakness is viewed as part of a broad 1.1110/1.1230 range. However, downward momentum is beginning to pick up and the prospect for a clear break of 1.1110 has increased. Looking ahead, a breach of 1.1110 would suggest EUR trade towards the next support at 1.1065. Overall, the current mild downward pressure is expected to increase unless EUR can move back above 1.1195 within these few days.”
In the longer run “EUR/USD could trade sideways but the top of the range at 1.1200 appears to be more vulnerable.”
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