EUR/USD: Diminishing bets for a break below 0.9920 – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang noted that a sustained breach of 0.9920 in EUR/USD looks unlikely for the time being.

Key Quotes

24-hour view: “We expected EUR to ‘trade in a choppy manner between 1.0000 and 1.0100’ yesterday. However, EUR plummeted to a low of 0.9950 before rebounding quickly. Despite the relatively sharp drop, downward momentum has not improved by much. That said, there is scope for EUR to retest the 0.9950 level (minor support is at 0.9980) before the risk of a stronger rebound would increase. The next support at 0.9920 is unlikely to come under threat. Resistance is at 1.0050 followed by 1.0075.”

Next 1-3 weeks: “We have held a negative EUR view for more than 2 weeks now. As EUR plummeted, in our latest narrative from two days ago (13 Jul, spot at 1.0035), we indicated that EUR is still weak and the next levels to focus on are at 0.9960 and 0.9920. Yesterday (14 Jul), EUR cracked 0.9960 before rebounding sharply from 0.9950. Despite breaching 0.9960, downward momentum has not improved by much. However, the weak phase is still intact as long as EUR does not move above 1.0120 (‘strong resistance’ level was at 1.0150 yesterday). As long as the ‘strong resistance’ level is not breached, EUR could continue to weaken even though the pace of any decline is likely to be slower. Overall, while there is room for EUR to drop to the next support at 0.9920 but at this stage, the odds for further sustained decline below this level are not high.”