Euro: Medium-term downside remains in focus against US Dollar - UOB

FXStreet Insights Team FXStreet

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann highlight that EUR/USD has fallen for five straight sessions, closing at 1.1464 after a sharp 0.68% drop. Short-term, the pair is seen staying within 1.1435–1.1505 due to oversold conditions, but the 1-3 weeks view still looks for further downside toward 1.1435 with potential extension to 1.1400 unless resistance at 1.1545 is breached.

Euro slide extends with firm supports

"24-HOUR VIEW: After our expectations for EUR to decline to 1.1520 did not materialise, we highlighted the following yesterday: “Downward momentum is starting to slow, but there is still a chance for EUR to decline toward 1.1520. A breach of this level is not ruled, but based on the prevailing momentum, the major support at 1.1490 is still unlikely to come under threat.” Our call of a weaker EUR was not wrong, but we did not expect the sharp drop that sent it to a low of 1.1460. While further EUR weakness is not ruled, deeply oversold conditions suggest any decline could stay within a 1.1435/1.1505 range. In other words, EUR is unlikely to break clearly below 1.1435."

"1-3 WEEKS VIEW: Our most recent narrative was from two days ago (15 Sep, spot at 1.1550), when we highlighted that “the sharp increase in momentum suggests EUR could decline toward 1.1490.” In a sharp move yesterday, EUR plunged by 0.68% as it closed lower for the fifth straight day at 1.1464. Although EUR has fallen substantially over the past few days, downward momentum continues to build, and from here, we expect EUR to decline toward 1.1435, with potential extension to 1.1400. On the upside, a breach of 1.1545 (‘strong resistance’ was at 1.1585 yesterday) would mean that the downward momentum from late last week is easing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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