Further decline could see EUR/USD revisiting the 1.0720 region in the next few weeks, note Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
Key Quotes
24-hour view: In NY trade last Friday, EUR rose briefly to 1.0881 before plummeting to a low of 1.0769. While approaching oversold levels, the decline is likely to break below last month’s low near 1.0765. In view of the oversold conditions, the next support at 1.0720 is unlikely to come into view. On the upside, if EUR breaks above 1.0825 (minor resistance is at 1.0800), it would indicate that the weakness in EUR has stabilised.
Next 1-3 weeks: We left off last Thursday (31 Aug, spot at 1.0930) where we indicated that if EUR “breaks and holds above 1.0955, the next level to watch is 1.1000.” Not only did EUR not break above 1.0955, but it also plummeted to a low of 1.0739 on Friday. After the sharp decline, downward momentum appears to be building, albeit tentatively. In the next few days, as long as EUR stays below 1.0860, it could edge lower to 1.0720. EUR must break and stay below 1.0720 before a sustained decline is likely. Looking ahead, the next significant support below 1.0720 is at 1.0635.
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