EUR/USD: Expected to reach 1.0825 – UOB Group
|EUR is expected to decline gradually, potentially reaching 1.0825. In the longer run, to reach the significant support at 1.0770, EUR must keep moving lower, or the likelihood of it reaching this level will diminish quickly, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Downward momentum can be short-lived
24-HOUR VIEW: “We expected EUR to edge lower yesterday, but we indicated that ‘due to mild momentum, any decline is unlikely to break clearly below 1.0860.’ Our anticipation for EUR to weaken was correct, but we underestimated the decline as it dropped to a low of 1.0853. Downward momentum has increased, albeit not much. Today, we continue to expect EUR to decline gradually, potentially to 1.0825. We do not expect the major support at 1.0770 to come into view. On the upside, resistance levels are at 1.0880 and 1.0900.”
1-3 WEEKS VIEW: “Our most recent narrative was from two days ago (16 Oct, spot at 1.0905), wherein we indicated that “the slight increase in momentum suggests there is a chance of EUR breaking below the support zone of 1.0860/1.0885, but it remains to be seen if it can maintain a foothold below these levels.’ Yesterday, EUR fell below the support zone, reaching a low of 1.0853. While we would prefer a more definitive break, the price action suggests that the EUR weakness that started early this month remains intact. The next significant support level is some way off at 1.0770. To reach this level, EUR must keep moving lower, or the likelihood of it reaching this level will diminish quickly. Conversely, a breach of the ‘strong resistance’ at 1.0935 (level was at 1.0950 yesterday) would mean that the weakness has stabilised.”
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