EUR/USD: A sustained decline below 0.9900 is not favoured – UOB

Despite the recent price action, a sustained drop below 0.9900 in EUR/USD appears unlikely for the time being, noted FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We did not anticipate the sharp sell-off in EUR during NY session. The outsized decline in EUR has scope to dip below 0.9930 before stabilization is likely. The next support at 0.9900 unlikely to come under threat. On the upside, a breach of 1.0050 (minor resistance is at 1.0010) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “EUR tanked yesterday and the break of our ‘strong support’ level at 1.0030 has invalidated our view for further EUR strength (see annotations in the chart below). The outsized drop appears to be overdone but there is room for EUR to weaken to 0.9900. At this stage, a sustained decline below this level appears unlikely. All in, as long as the ‘strong resistance’ level at 1.0070 is not breached, EUR is likely to stay under pressure.”