Can dip to 1.0885 before the risk of a rebound – UOB Group

Downward momentum has increased slightly; the Euro (EUR) could dip to 1.0885 before the risk of a more sustained rebound is likely. In the longer run, chance of EUR breaking below the major support zone of 1.0860/1.0885; it remains to be seen if it can maintain a foothold below these levels, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

EUR can break below 1.0860/1.0885

24-HOUR VIEW: “Yesterday, we indicated that ‘the bias for EUR is tilted to the downside.’ However, we pointed out that ‘given the mild momentum, any decline is unlikely to break clearly below 1.0900, and the next support at 1.0885 is unlikely to come under threat.’ EUR subsequently dropped more than expected to 1.0888, before recovering to close at 1.0909 (-0.26%). Despite the decline, downward momentum only increased slightly. Today, EUR could dip to 1.0885 before a more sustained rebound is likely. The next support at 1.0860 is unlikely to come into view. To maintain the mild momentum, EUR must not break above 1.0935 with minor resistance at 1.0920.”

1-3 WEEKS VIEW: “In our most recent narrative from last Friday (11 Oct, spot at 1.0935), we highlighted that ‘while the outlook for EUR remains negative, downward momentum appears to be slowing, and the probability of EUR breaking the significant support zone between 1.0860 and 1.0885 is not high.’ Yesterday, EUR fell to a low of 1.0888. The slight increase in momentum suggests there is a chance of EUR breaking below the support zone of 1.0860/1.0885, but it remains to be seen if it can maintain a foothold below these levels. Overall, only a breach of 1.0960 (‘strong resistance’ level was 1.0980 yesterday) would mean that the weakness in EUR that started early in this month has stabilised.”