EUR/USD risks a deeper drop to 0.9770/20 – UOB

The continuation of the downside pressure in EUR/USD could extend to the 0.9770 ahead of 0.9720, according to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We expected EUR to decline yesterday but we were of the view that ‘any weakness is unlikely to break the solid support at 0.9900’. The anticipated weakness exceeded our expectations as EUR easily took out 0.9900 and plunged to a low of 0.9812. Despite the wild gyration after the low, the risk for today is still on the downside, likely to 0.9770. Resistance is at 0.9865 followed by 0.9900.”

Next 1-3 weeks: “Our latest narrative was from last Wednesday (14 Sep, spot at 0.9980) where while EUR is under pressure, a sustained decline below the major support at 0.9900 appears unlikely. After a week, EUR decisively cracked 0.9900 and plunged to a low of 0.9812 during NY hours. The sharp decline indicates that EUR is likely to continue to head lower in the coming days. The levels to watch are at 0.9770 and 0.9720. On the upside, a breach of 0.9940 (‘strong resistance’ level was at 1.0050 yesterday) would indicate that the current weakness in EUR has stabilized.”