FX Strategists at UOB Group noted EUR/USD could extend the decline to the 1.1630 level ahead of 1.1600 in the next weeks.
Key Quotes
24-hour view: “We highlighted yesterday that ‘there is scope to EUR to dip towards 1.1720 first before the current weakness should stabilize’. While EUR rebounded after touching a low of 1.1719, it dropped back down sharply during NY hours (low of 1.1690). In other words, the expected stabilization did not materialize. While further EUR weakness is not ruled out, oversold conditions suggest a sustained decline below the major support at 1.1660 is unlikely (next support is at 1.1630). All in, EUR is expected to stay under pressure unless it can move above 1.1760 (minor resistance is at 1.1730).”
Next 1-3 weeks: “We noted yesterday (22 Sep, spot at 1.1765) that the ‘rapid improvement in downward momentum suggests EUR could weaken further towards the next major support at 1.1695’. While our view was correct, we did expect 1.1695 to come into the picture so soon (EUR dropped to an overnight low of 1.1690). Downward momentum has improved further and the risk is still on the downside. From here, the next support is at 1.1630 followed by 1.1600. On the upside, the ‘strong resistance’ level has moved lower to 1.1815 from yesterday’s level of 1.1855. On a shorter-term note, 1.1760 is already quite a strong level.”
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