EUR/USD: Under mild downward pressure

The Euro (EUR) is under mild downward pressure; it is likely to edge lower but is unlikely to break the major support at 1.0770. In the longer run, downward momentum has not improved much, but there is a chance for EUR to drop to 1.0770 before stabilisation can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Chance for EUR to drop to 1.0770

24-HOUR VIEW: “After EUR fell sharply two days ago, we indicated yesterday that ‘there is potential for EUR to decline further.’ However, we pointed out that ‘it remains to be seen whether 1.0770 is within reach today.’ We also pointed out that ‘there is another support level at 1.0800.’ Our view was not wrong, as EUR dropped to a low of 1.0792, closing at 1.0797 (-0.17%). There has been a slight increase in momentum. Today, we expect EUR to edge lower, but it does not appear to have enough momentum to break the major support at 1.0770. Resistance is at 1.0815; a breach of 1.0830 would indicate that the current mild downward pressure has faded.

1-3 WEEKS VIEW: “We turned negative in EUR early this month. After EUR dropped sharply two days ago, we indicated yesterday (22 Oct, spot at 1.0815) that ‘Despite the relatively sharp decline, downward momentum has not improved much.’ We also indicated that ‘there is a chance for EUR to drop to 1.0770 before stabilisation can be expected.’ We continue to hold the same view as long as 1.0870 (‘strong resistance’ level was at 1.0880 yesterday) is not breached. Looking ahead, if EUR breaks clearly below 1.0770, the next level to watch is a significant support at 1.0740.”

(This story was corrected on October 24 at 06:49 GMT to say that 1.0880 was a strong resistance level, not support.)

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