Downside pressure alleviated above 1.0925 – UOB

UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang note that the downside bias in EUR/USD is expected to mitigate on a break above 1.0925.

Key Quotes

24-hour view: Yesterday, we highlighted that “the risk for EUR is still on the downside and it could dip below 1.0835, possibly testing the major support at 1.0805”. EUR dipped below 1.0835 twice (once in Asian trade and once in NY trade) and both times, it rebounded quickly after touching 1.0832. Downward pressure has faded, and the risk for EUR is no longer on the downside. Today, EUR is likely to trade in a range between 1.0855 and 1.0925. 

Next 1-3 weeks: We highlighted yesterday (06 Jul, spot at 1.0855) that “downward momentum has improved, and the chance of EUR dropping to 1.0805 has increased.” While EUR dropped to a 3-week low of 1.0832, it rebounded strongly and closed higher by 0.33% (1.0887). From here, if EUR breaks above 1.0925 (no change in the ‘strong resistance’ level), it would suggest that 1.0805 is not coming into view this time around.