FX Strategists at UOB Group suggested EUR/USD still faces extra downside pressure.
Key Quotes
24-hour view: “While we expected EUR to “weaken further” yesterday, we held the view that the “next support at 1.0975 is unlikely to come into the picture”. The subsequent weakness exceeded our expectation as EUR plummeted to 1.0964 before rebounding quickly. Despite the recovery, the underlying tone remains soft and it is too early to expect a significant rebound. EUR is more likely to consolidate its loss and trade sideways at these lower levels, likely between 1.0970 and 1.1115”.
Next 1-3 weeks: “EUR dropped to 1.0964 before closing at a 3-week low of 1.0991 (-0.24%). While downward momentum has picked up, we still view the current price action as part of a broad sideway-trading phase (same view since 13 Sep, spot at 1.1055). That said, the weakened underlying tone suggests it could edge lower towards the bottom of the expected 1.0925/1.1100 range first range (narrowed from 1.0925/1.1130 previously). At this stage, the prospect for a sustained decline below 1.0925 is not high”.
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