According to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, EUR/USD still risks a deeper pullback in the near term.
24-hour view: “After EUR plunged below 0.9600 and snapped back up, we highlighted yesterday that while ‘the weakness in EUR has not stabilized, 0.9500 is unlikely to come under threat for now’. EUR subsequently rose to 0.9709 before dropping back down to close at 0.9606 (0.87%). Downward pressure has eased slightly and this combined with oversold conditions suggests EUR is likely to consolidate for today, expected to be between 0.9560 and 0.9700.”
Next 1-3weeks: “There is no change in our view from yesterday (26 Sep, spot at 0.9630). As highlighted, the impulsive and outsized drop from last Friday suggests EUR could continue to weaken, possibly to 0.9500. Overall, the weakness in EUR from about 2 weeks ago is intact as long as EUR does not breach 0.9770 (‘strong resistance’ level was at 0.9810 yesterday).”