FX Strategists at UOB Group noted EUR/USD could grind lower and visit the 1.1600 zone in the next weeks.
Key Quotes
24-hour view: “Yesterday, we highlighted that ‘while EUR could weaken further, the still oversold conditions suggest that EUR is unlikely able to break the major support at 1.1670 for now’. The subsequent EUR weakness exceeded our expectations as EUR breached 1.1670 and dropped to 1.1664. Despite the decline, downward momentum has not improved by all that much. From here, EUR could edge lower and test the next major support at 1.1640 first before the risk of a rebound would increase. Resistance is at 1.1695 but only a break of 1.1715 would indicate that the current downward pressure has eased.”
Next 1-3 weeks: “We turned negative on EUR two days (18 Aug, spot at 1.1710). We noted yesterday that ‘the risk for EUR is still on the downside and the next level to focus on is at 1.1670 followed by 1.1640’. EUR subsequently dropped to 1.1664. While downward momentum has not improved by much, the risk is still for a lower EUR. A break of 1.1640 would shift the focus to the major and rather critical level at 1.1600. Overall, the downside risk is deemed intact as long as EUR stays below 1.1745 (‘strong resistance’ level previously at 1.1775).”
