Further downside could drag EUR/USD to the 1.0515 region in the next few weeks, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.
Key Quotes
24-hour view: We did not anticipate the sharp selloff that sent EUR plummeting to a low of 1.0572. The sharp drop is, unsurprisingly, oversold, but EUR could drop further to 1.0555 before stabilisation is likely. The major support at 1.0515 is unlikely to be tested today. On the upside, if EUR breaks above 1.0635 (minor resistance is at 1.0615), it would mean that the weakness in EUR has stabilised.
Next 1-3 weeks: Our most recent narrative was from last Thursday (21 Sep, spot at 1.0655), wherein EUR is likely to trade in a range of 1.0590/1.0730 for now. We were also of the view that “if EUR breaks clearly below 1.0590, it will likely lead to a sustained decline towards the major support at 1.0515.” Yesterday (25 Sep), EUR broke below 1.0590, dropped to 1.0572, and then closed at 1.0590 (-0.58%). The price action suggests that EUR is likely to weaken to 1.0515 in the coming days. EUR’s downside risk remains if it stays below the ‘strong resistance’ level, currently at 1.0665.
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