FX Strategists at UOB Group noted the pair’s downside sentiment stays unchanged in the near term.
24-hour view: “The anticipated weakness exceeded our expectation as EUR dropped below the 1.1780 support to hit a low of 1.1761. The subsequent strong bounce from the low suggests that 1.1761 is a short-term bottom. From here, EUR is expected to consolidate its recent sharp drop and trade sideways. Expected range for today, 1.1785/1.1855”.
Next 1-3 weeks: “We highlighted yesterday (16 May, 1.1830) that the “immediate pressure is on the downside” and added, “further weakness to 1.1750 would not be surprising”. EUR subsequently hit a low of 1.1761 before rebounding. The price action reinforces our view wherein while the near-term outlook for EUR is negative, any weakness is unlikely to have enough momentum to move below last December’s low of 1.1715 (1.1750 is already a solid support). On the upside, only a move back above the ‘key resistance’ at 1.1900 (level adjusted lower from 1.1940) would indicate that the current downward pressure has eased”.
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