In opinion of FX Strategists at UOB Group, EUR/USD could now slip back and test the 1.10 region in the next weeks.
24-hour view: “While we held the view yesterday “the risk is on the downside”, the anticipated “solid support at 1.1090” did not materialize as EUR plummeted to a low of 1.1062 during NY hours. The rapid drop is running ahead of itself and while EUR could dip to 1.1050, a sustained decline below this level is unlikely (next support at 1.1020). Resistance is at 1.1100 followed by the stronger level near 1.1125. Yesterday’s peak at 1.1140 is not expected to come into the picture”.
Next 1-3 weeks: “While we cautioned yesterday (05 Nov, spot at 1.1125) that the “odds for further EUR strength have diminished”, the sharp drop in EUR that easily cracked the 1.1090 ‘strong support’ level and the subsequent weak daily closing at 1.1074 came as a surprise (the -0.47% decline is the largest 1-day drop in 6 weeks). The positive phase in EUR that started about one month ago has ended and the current weakness is viewed as a corrective pullback (and not a major reversal). For the next couple of weeks, EUR is likely to trade with a downside bias towards 1.1000. At this stage, a sustained decline below this level is not expected. Resistance is at 1.1125 but only a 1.1140 (‘strong resistance’ level) would indicate our view for a pull-back is incorrect”.
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