In view of FX Strategists at UOB Group, spot stays under pressure and could slip back to lower levels in the near term.
Key Quotes
24-hour view: “We highlighted yesterday that the “sharp drop has scope to extend lower but is unlikely to threaten 1.1860”. The weakness in EUR went deeper than expected as the break of 1.1860 led to a rapid drop to a low of 1.1831. With no signs of stabilization just yet, further weakness seems likely even though 1.1800 is another strong level and is expected to offer solid support (next support is at 1.1770). On the upside, only a move back above 1.1905 would indicate that the current weakness has stabilized (minor resistance is at 1.1880)”.
Next 1-3 weeks: “We have held the view that the undertone for EUR is on the ‘weak side’ for a while but have been frustrated with the lack of deeper pullback. EUR closed at a 1-month low yesterday and the risk of a deeper pull-back has increased considerably. From here, further weakness towards 1.1770 would not be surprising but this is a rather major support and may not yield so easily (next support is 1.1720). Overall, EUR is expected to stay under pressure in the coming days unless it can reclaim 1.1960”.
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