In opinion of FX Strategists at UOB Group, EUR/USD could attempt a move to the 1.0810 area in the next weeks.
Key Quotes
24-hour view: “We highlighted the ‘rapid and strong pick up in momentum’ yesterday and expected ‘further EUR weakness to 1.0840’. The subsequent decline exceeded our expectation as EUR dropped to an overnight low of 1.0832 before ending the day on a soft note at 1.0840 (-0.29%). The weakness in EUR over the past several days is deep in oversold territory now but is still not showing sign of stabilizing. From here, EUR could weaken further but oversold conditions could ‘limit’ any decline to a probe of the major 1.0810 support. For today, the prospect for a sustained drop below 1.0810 is not high (next major support is at 1.0770). Resistance is 1.0865 but only a move above 1.0890 would indicate the current weakness has stabilized.”
Next 1-3 weeks: “As highlighted, EUR ‘is still weak’ and the ‘focus is at 1.0810’. EUR subsequently registered a ‘lower low’ for nine straight days as it touched 1.0832 before ending the day at 1.0840 (-0.28%). From here, a breach of 1.0810 would not be surprising but in view of the severely oversold conditions, the next support at 1.0770 could be out of reach. All in, EUR is expected to stay on the back foot unless it can move back above 1.0905 (‘strong resistance’ level was at 1.0950 yesterday).”
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