EUR/USD: Diminishing bets for a drop to 1.0600 – UOB

UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang suggest a potential drop in EUR/USD to the 1.0600 region appears to have lost some traction.

Key Quotes

24-hour view: “Our view for EUR to strengthen yesterday was incorrect as it dropped to 1.0633 and then rebounded quickly to end the day at 1.0688 (0.42%). The rebound in severely oversold conditions suggests EUR is unlikely to weaken further. Today, EUR is more likely to trade sideways in a range between 1.0655 and 1.0725.”

Next 1-3 weeks: “Yesterday (31 May, spot at 1.0730), we indicated that the 3-week EUR weakness has stabilized and we held the view that it ‘is likely to trade in a range of 1.0670/1.0820 for the time being’. However, EUR fell to a fresh two-month low of 1.0633. While the price actions suggest our call for stabilization is premature, there is no significant improvement in downward momentum and the chance for EUR to drop further to 1.0600 is low. On the upside, a breach of 1.0750 would suggest 1.0600 is not coming into view.”