EUR/USD: EUR must break below 1.0740 to continue to decline – UOB Group
|The Euro (EUR) is expected to trade in a range between 1.0760 and 1.0810. In the longer run, to continue to decline, EUR must break the significant support at 1.0740, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
Expected to trade between 1.0760 and 1.0810
24-HOUR VIEW: “Yesterday, when EUR was at 1.0800, we indicated that EUR ‘is under mild downward pressure.’ We expected it to ‘edge lower, but is unlikely to break the major support at 1.0770.’ However, EUR fell more than expected to 1.0760, recovering slightly to close at 1.0781 (- 0.15%). Oversold conditions combined with tentative signs of slowing momentum suggests EUR is unlikely to weaken much further. Today, we expect EUR to trade in a range between 1.0760 and 1.0810.”
1-3 WEEKS VIEW: “Our most recent narrative was from two days ago (22 Oct, spot at 1.0815), wherein ‘despite the relatively sharp decline, downward momentum has not improved much.’ We indicated that ‘there is a chance for EUR to drop to 1.0770 before stabilisation can be expected.’ Yesterday, EUR dropped to 1.0760. Although, there is no sign of stabilisation yet, there has been no significant increase in momentum either. To continue to decline in a sustained manner, EUR must break the significant support level at 1.0740 (see 1-3 months update below). The likelihood of EUR breaking below 1.0740 will remain intact, provided that 1.0840 (‘strong resistance’ level was at 1.0870 yesterday) is not breached. Looking ahead, if EUR breaks clearly below 1.0740, the next level to watch is another significant support at 1.0665.”
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