FX Strategists at UOB Group noted EUR/USD has not ruled out another test of the mid-1.1700s in the next weeks.

Key Quotes

24-hour view: “While our view for EUR to weaken yesterday was correct, our expectation that ‘a break of the major support at 1.1750 appears unlikely’ was not. EUR dropped to a low of 1.1735 but the decline was short-lived as it rebounded strongly to end the day higher by +0.28% (1.1847). The sharp and swift rebound appears to be running ahead of itself but there is room for EUR to extend its gains. That said, the odds for a break of the strong resistance at 1.1885 are not high (next resistance is at 1.1915). Support is at 1.1820 but only a breach of 1.1795 would indicate the current upward pressure has eased.”

Next 1-3 weeks: “Yesterday (17 Sep, spot at 1.1795), we highlighted that EUR ‘is under mild downward pressure and could dip below 1.1750 but any weakness may not be sustained’. EUR subsequently dropped to a low of 1.1735 before staging a surprising sharp and robust rebound (overnight high of 1.1853). While downward momentum has been dented, only a break of 1.1885 (no change in ‘strong resistance’ level) would indicate the current mild downward pressure has eased. In other words, there is still chance, albeit a diminishing one for EUR to stage another attempt to close below 1.1750. Looking forward, a breach of 1.1885 would indicate EUR could consolidate within a broad range for a period of time.”

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