A drop to 1.0920 appears not favoured – UOB

Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group see a dwindling likelihood of a move to the 1.0920 region in EUR/USD.

Key Quotes

24-hour view: Yesterday, we noted the “slightly weaker underlying tone”, and we expected EUR to “trade in a lower range of 1.0970/1.1030.” However, EUR dropped to 1.0950 before rebounding to end the day at 1.0982 (-0.10%). EUR rose in early Asian trade, but there is no clear increase in momentum. The current price actions appear to be part of a consolidation. Today, we expect EUR to trade sideways between 1.0970 and 1.1030. 

Next 1-3 weeks: We have held a negative EUR view since the middle of last week. Our latest narrative was from Monday (31 Jul, spot at 1.1025), wherein “downward momentum has eased somewhat, but only a breach of 1.1070 would indicate that EUR is not weakening further.” Yesterday, EUR dropped to 1.0950 and then rebounded. Today, EUR rose sharply in early Asian trade. Downward momentum has deteriorated further, and the chance for EUR to drop to the major support at 1.0920 this time around is slim. However, only a breach of 1.1070 would indicate that the current downward pressure has faded.