EUR/USD: Significant support at 1.0330 is unlikely to come into view – UOB Group

Steep decline appears to be excessive, but Euro (EUR) could test 1.0375 vs US Dollar (USD); significant support at 1.0330 is unlikely to come into view. In the longer run, EUR could continue to decline; it is currently unclear whether the significant support at 1.0330 is within reach, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

EUR may continue to decline

24-HOUR VIEW: "Two days ago, EUR popped to a high of 1.0528, and then pulled back. Yesterday, when EUR was at 1.0485, we noted that 'the brief advance did not result in a significant increase in momentum,' and we expected EUR to 'trade in a 1.0465/1.0515 range.' Instead of trading in a range, EUR sold off sharply and closed at a two-week low of 1.0397, lower by 0.82%. The steep decline appears to be excessive, but with no signs of stabilisation just yet, EUR could test the 1.0375 level. The significant support at 1.0330 is unlikely to come into view. To sustain the oversold momentum, EUR must remain below 1.0440 (minor resistance is at 1.0420)."

1-3 WEEKS VIEW: "Yesterday (27 Feb, spot at 1.0485), we cautioned that “unless EUR breaks and holds above 1.0530 within these 1-2 days, the likelihood of it rising further will diminish.” We also highlighted that “a breach of 1.0440 (‘strong support’ level) would suggest that EUR has entered a range trading phase.” EUR subsequently broke below 1.0440 and plunged. The rapid increase in downward momentum suggests that instead of trading in a range, EUR could continue to decline. However, it is currently unclear whether the major support at 1.0330 is within reach. To keep the momentum going, EUR must remain below 1.0470 (‘strong resistance’ level)."