According to FX Strategists at UOB Group, EUR/USD could still see some downside to the 1.0770 region ahead of a potential move to 1.0749 in the near-term.
24-hour view: “Expectation for EUR to ‘weaken further to 1.0770’ did not materialize as it rebounded after touching a low of 1.0780. Downward pressure has eased and the solid support at 1.0770 is likely to remain unchallenged. For today, EUR is expected to trade sideways at these lower levels, likely between 1.0785 and 1.0830.”
Next 1-3 weeks: “We highlighted on Monday (17 Feb, spot at 1.0840) that ‘the combination of waning momentum and oversold conditions suggest that a bottom may not be far away’. We added, ‘while a dip below 1.0810 would not be surprising, the next support at 1.0770 could be out of reach’. Instead of ‘dipping below 1.0810’, EUR plummeted below this level and dropped to a low of 1.0784 before ending the day on a weak note at 1.0791 (-0.40%). The sudden and rapid pick up in momentum suggests the weak phase that started earlier this month is not ready to stabilize just yet. Only a move above 1.0860 (‘strong resistance’ level previously at 1.0890) would indicate that the current weakness in EUR has run its course. Otherwise, a break of 1.0770 would open up the way for further decline towards 1.0740 (next support is at 1.0700).”
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