EUR/USD: Price action suggests further EUR weakness

As long as 1.0800 is not breached, the Euro (EUR) could drop to 1.0665 before stabilisation can be expected. In the longer run, price action suggests further EUR weakness; the levels to watch are 1.0665 and 1.0600, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

EUR can drop to 1.0665 before stabilisation

24-HOUR VIEW: “After EUR dropped sharply in early Asian trade yesterday, we indicated that ‘The sharp drop could extend but is unlikely to break the major support at 1.0780.’ However, EUR plunged through 1.0780 and dropped further to 1.0681. EUR closed at 1.0728, lower by a whopping 1.85%. After the frenetic price action yesterday, EUR is likely to settle into a more moderate range today. Overall, as long as 1.0800 is not breached, EUR could drop to 1.0665 before stabilisation can be expected. A sustained break below this level seems unlikely.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Friday (01 Nov, spot at 1.0885), wherein ‘upward momentum is beginning to build, but any advance in EUR is likely to face significant resistance at 1.0935.’ EUR tested the significant resistance on Tuesday, reaching a high of 1.0936. Yesterday (Wednesday). EUR reversed abruptly and nosedived, reaching a low of 1.0681. During this move, it broke a significant weekly support level near 1.0740. The price action suggests further EUR weakness. The support levels to watch are 1.0665 (low in Jun) and the year-to-date low of 1.0600 in April. For the coming few days, any rebound is likely to remain below the ‘strong resistance’ level, currently at 1.0870.”

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