EUR/USD risks a deeper drop near term – UOB

UOB Group’s Economist Lee Sue Ann and Market Strategist Quek Ser Leang suggest EUR/USD could accelerate its losses if 1.0570 is breached.

Key Quotes

24-hour view: “Yesterday, we expected EUR to weaken further even though we were of the view that ‘any decline is expected to encounter solid support at 1.0570’. Our view was not wrong as EUR edged to a low of 1.0575 in NY trade before recovering slightly to end the day little changed at 1.0595 (-0.06%). While downward momentum has not improved much, the bias for EUR is still on the downside even though it remains to be seen if it can maintain a foothold below the major support at 1.0570. On the upside, a breach of 1.0640 (minor resistance is at 1.0620) would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “Our update from yesterday (23 Feb, spot at 1.0600) still stands. As highlighted, EUR is likely to weaken further. A break of the major support at 1.0570 could trigger a rapid drop, as the next significant support is some distance away at 1.0485. Overall, only a breach of 1.0670 (‘strong resistance’ level was at 1.0690 yesterday) would indicate that the EUR weakness that started late last week has ended.”