In opinion of FX Strategists at UOB Group, EUR/USD risks a deeper pullback on a breach below the 1.1500 mark.
24-hour view: “We highlighted yesterday that while EUR ‘could dip below last week’s low at 1.1527; the major support at 1.1500 is not expected to come into the picture’. Our view was not wrong as EUR dipped to 1.1523 before settling 1.1527 (-0.21%). Downward momentum has barely improved and 1.1500 is still not expected to come into the picture. For today, EUR is more likely to trade between 1.1520 and 1.1570.”
Next 1-3 weeks: “We have expected a weaker EUR for about 2 weeks now. After EUR dropped to 1.1527 and rebounded, we highlighted on Monday (11 Oct, spot at 1.1570) that ‘downward momentum is beginning to wane and the odds for EUR to move to 1.1500 have diminished’. While EUR dropped to 1.1523 yesterday, downward momentum has not improved by much. That said, there is scope for EUR to test 1.1500 but EUR has to close below this solid support before further sustained decline can be expected (next support is at 1.1450). On the upside, a break of 1.1585 (‘strong resistance’ level previously at 1.1605) would indicate that the weak phase in EUR has run its course.”
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