EUR/USD: There is still room for a drop to 1.1065 – UOB

According to FX Strategists at UOB Group, EUR/USD could still slip back to the 1.1065 level in the next weeks.

Key Quotes

24-hour view: “We expected EUR to weaken yesterday but were of the view that “any weakness is expected to encounter solid support at 1.1065”. While EUR subsequently moved lower, it rebounded quickly after touching 1.1075. Downward pressure has eased with the rebound but it is too early to expect a sustained recovery. EUR is more likely to consolidate and trade sideways, expected to be within a 1.1075/1.1115 range.”

Next 1-3 weeks: “While we highlighted last Friday (17 Jan, spot at 1.1135) that ‘the downside risk remains intact’, we were of the view that the ‘prospect for EUR to move towards 1.1065 has diminished’. In that context, the subsequent rapid and sharp drop of -0.42% (NY close of 1.1088) came as a surprise. The price action suggests that there is scope for EUR to dip below 1.1065. That said, the current decline in EUR is not viewed as part of a trending down-move and the next support at 1.1030 is likely strong enough to hold any further weakness. All in, EUR is expected to stay on the back foot unless it can move back above 1.1150 (‘strong resistance’ level was at 1.1175 last Friday).”