EUR/USD: Next on the downside comes in 1.1740 – UOB

Further decline in EUR/USD could see 1.17400 retested in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that EUR ‘could break the major support at 1.1800 but the next support at 1.1780 is likely out of reach for now’. Our view was not wrong even though EUR touched 1.1780 first before rebounding. While the decline is oversold, the risk is for further EUR weakness. However, the next major support at 1.1740 is unlikely to come into the picture for now (there is another support at 1.1760). On the upside, a breach of 1.1840 (minor resistance is at 1.1820) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “We have held a negative view in EUR for about a week now. In our update from yesterday (07 Jul, spot at 1.1825), we highlighted ‘downward momentum has been rejuvenated and a break of 1.1800 would open up the way for EUR to weaken to 1.1780’. While our view was not wrong, we did not quite anticipate the rapid manner by which EUR dropped to 1.1780 (low of 1.1780 during NY hours). The price actions suggest further EUR weakness is likely and the next level to focus on is at 1.1740. Overall, the current weakness is deemed intact as long as EUR does not move above 1.1860 (‘strong resistance’ level was at 1.1895 yesterday).”