EUR/USD risks a deeper retracement – UOB

FX Strategists at UOB Group suggested EUR/USD could recede to the 1.1725 level in the next weeks.

Key Quotes

24-hour view: “The sharp and rapid drop in EUR to 1.1749 came as a surprise (we were expecting EUR to trade sideways). While oversold, the decline has scope to dip to 1.1745 first before a more sustained rebound can be expected. The next support at 1.1725 is unlikely to come under threat. Resistance is at 1.1785 followed by 1.1800.”  

Next 1-3 weeks: “Yesterday (16 Sep, spot at 1.1815), we highlighted that ‘the quiet price actions the past couple of days have resulted in a loss in downward momentum’ and ‘the prospect for EUR to close below 1.1770 is beginning to diminish’. We added, ‘in order to revive the flagging momentum, EUR has to move and stay below 1.1790 within these 1 to 2 days’. That said, we did not quite anticipate the sudden surge in downward momentum as EUR plunged to 1.1749 before closing on a weak note at 1.1764 (-0.43%). Further EUR weakness appears likely and the level to focus on is at 1.1725. The downside risk is deemed intact as long as EUR does not move above 1.1820 (‘strong resistance’ level previously at 1.1850).”