The Euro (EUR) could edge higher to 1.0520; the strong resistance at 1.0560 is unlikely to come under threat. In the longer run, EUR must break and remain below the 1.0333 low before further decline can be expected, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann notes.
EUR to decline further below the 1.0333 low
24-HOUR VIEW: “Following last Thursday’s sharp drop, we pointed out on Friday that EUR ‘could break the significant support at 1.0450.’ However, we were of the view that ‘the next technical target at 1.0400 is likely out of reach for the time being.’ While our view of a lower EUR was not wrong, we did not anticipate it to plummet to 1.0333. EUR rebounded quickly and closed at 1.0417 but opened higher in early Asian trade today. There has been a slight increase in momentum, and it could edge higher to 1.0520 today. The strong resistance at 1.0560 is unlikely to come under threat. Support is at 1.0450, followed by 1.0420.”
1-3 WEEKS VIEW: “We revised our EUR view to negative last Friday (22 Nov, spot at 1.0475), indicating that ‘EUR weakness has resumed, and the levels to monitor are 1.0450 and 1.0400.’ We also indicated that we would maintain our view provided that 1.0560 (‘strong resistance’ level) is not breached. EUR subsequently broke below 1.0450 and 1.0400, reaching a low of 1.0333. However, the decline was brief, as it rebounded to close at 1.0417 (-0.53%). While the weakness in EUR remains intact, it must now break and remain below the 1.0333 low before further decline can be expected. The likelihood of EUR breaking below 1.0333 is not high, but it will remain intact as long as 1.0560 (no change in ‘strong resistance’) is not breached in the next few days.”
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