EUR/USD: Further downside appears on the cards – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang noted EUR/USD still risks further downside, with the initial target at the parity level.

Key Quotes

24-hour view: “EUR dropped by 0.54% and closed at a 5-week low of 1.0034 last Friday. While clearly oversold, the weakness in EUR has yet to stabilize. In other words, EUR could continue to weaken albeit likely at a slower pace and a sustained decline below 1.0000 is unlikely for today. Resistance is at 1.0060 but only a break of 1.0085 would indicate that the current EUR weakness has stabilized.”

Next 1-3 weeks: “Last Friday, EUR closed at 1.0034 and posted a large weekly loss of 2.18%. The sharp decline is accompanied by strong downward momentum and further EUR weakness appears likely. A break of 1.0000 would not be surprising but it is left to be seen if the oversold decline could break the year-to-date low at 0.9950. On the upside, a breach of 1.0115 (‘strong resistance’ level) would indicate that EUR is unlikely to weaken further.”