Sharp selloff seems excessive; instead of weakening further, the Euro (EUR) is likely to consolidate in a range of 1.0945/1.1010, or, in the broader range between 1.0910 and 1.1045, UOB Group Quek Ser Leang and Lee Sue Ann note.
Closest resistance is at 1.1010
24-HOUR VIEW: “Two days ago, EUR rose sharply to 1.1047 and then pulled back. Yesterday, we indicated that ‘the pullback in overbought conditions suggests EUR is unlikely to rise further.’ We expected EUR to ‘trade in a sideways range of 1.0985/1.1045.’ EUR traded sideways until NY trading, when it sold off sharply, reaching a low of 1.0948. The selloff seems excessive, and EUR is unlikely to weaken much further. Today, EUR is more likely to consolidate in a range of 1.0945/1.1010.”
1-3 WEEKS VIEW: “Our most recent narrative was from two days ago (14 Aug, spot at 1.0990), wherein EUR ‘is still positive, and the next level to watch is 1.1070.’ We highlighted that ‘only a breach of 1.0955 (‘strong support’) would mean that the EUR strength that started early last week (see annotations in the chart below) has come to an end.’ EUR subsequently rose to 1.1047 and, yesterday, it plummeted and broke below our ‘strong support’ level of 1.0955 (low has been 1.0948). The price action suggests that the EUR strength has ended. EUR has likely entered a consolidation phase. For the time being, it is likely to trade between 1.0910 and 1.1045.”
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