FX Strategists at UOB Group noted EUR/USD now risks a drop to 1.1740 ahead of 1.1700 in the next weeks.
Key Quotes
24-hour view: “Our expectation for EUR to ‘edge higher’ yesterday was incorrect as it plunged and cracked a couple of strong support levels before closing on a weak note at 1.1774 (-0.72%). The rapid drop is deeply oversold but with no signs of stabilization just yet, EUR could weaken to the next support at 1.1740. For today, a sustained decline below this level is unlikely (next support is at 1.1700). On the upside, a breach of 1.1820 (minor resistance is at 1.1800) would indicate that the current weakness has stabilized.”
Next 1-3 weeks: “Last Friday (09 Jul, spot at 1.1845), we indicated that EUR is a consolidation phase and is likely to trade between 1.1790 and 1.1895. The ease and the rapid manner by which EUR cracked the bottom of our expected range at 1.1790 and the subsequent weak daily closing at 1.1774 (-0.72%) indicates that the consolidation is over and EUR has likely moved into a negative phase. The support to monitor is at 1.1740; a clear break of this level would shift the focus to another major level at 1.1700. All in, EUR is expected to trade under pressure unless it can move above the ‘strong resistance’ level at 1.1840.”
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