EUR/USD faces further downside, but it is unlikely to test the key support around 1.1580, in opinion of FX Strategists at UOB Group.
24-hour view: “EUR dropped to a low of 1.1638 last Friday before closing on a soft note at 1.1647 (-0.23%). The decline is oversold but is not showing sign of stabilization just yet. From here, EUR could dip below the major support at 1.1610 but for today, the next support at 1.1580 is likely out of reach. On the upside, a move above 1.1695 (minor resistance at 1.1670) would indicate the current weakness has stabilized.”
Next 1-3 weeks: “In our latest update from last Thursday (29 Oct, spot at 1.1745), we indicated that ‘the improvement in downward momentum suggests the risk remains on the downside but EUR has to close below 1.1685 before a more sustained decline can be expected’. We added, ‘the next support is at 1.1610’. EUR subsequently closed below 1.1685 and dropped to a low of 1.1638 last Friday. From here, a break of 1.1610 would not be surprising but the next level at 1.1580 is a solid support and may not be easy to crack. All in, the current negative phase is deemed as intact as long as EUR does not move above 1.1745 (‘strong resistance’ level previously at 1.1835).”
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