EUR may break below 1.1040 in the longer run – UOB Group

Euro (EUR) is likely to trade in a 1.1050/1.1125 range. In the longer run, upward momentum has largely dissipated, and EUR is expected to trade in a range between 1.1040 and 1.1200, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann notes.

The 1.1040 support may become a magnet for EUR

24-HOUR VIEW: “After EUR fell sharply two days ago, we indicated yesterday that ‘the sharp and swift drop seems to be overextended.’ However, we were of the view that ‘there is room for EUR to decline further to 1.1095 before stabilization is likely.’ We highlighted that ‘the major support at 1.1040 is unlikely to come under threat.’ Although our view of a lower EUR was not wrong, it fell more than expected, reaching a low of 1.1054 before recovering. Conditions are severely oversold now, and EUR is unlikely to weaken much further. Today, EUR is more likely to trade in a 1.1050/1.1125 range.”

1-3 WEEKS VIEW: “We highlighted yesterday (29 Aug, spot at 1.1125) that upward momentum has largely dissipated. We expected EUR to trade in a range between 1.1040 and 1.1200. There is no change in our view. Looking ahead, as long as EUR does not break clearly below 1.1040, there is still chance for EUR to rise to 1.1200 later on. Conversely, if EUR breaks clearly below 1.1040, it could trigger a deeper pullback to 1.0890.”