Euro (EUR) could dip below last week’s low of 1.1540; a sustained decline below this level is unlikely. In the longer run, the likelihood of EUR reaching the 1.1490 during this phase of weakness is decreasing, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Sustained decline below 1.1540 is unlikely
24-HOUR VIEW: “EUR fell to a low of 1.1555 last Friday and then rebounded strongly. Yesterday, Monday, we stated that ‘while there is scope for the rebound to extend, there does not appear to be sufficient momentum to reach 1.1655.’ Our view turned out to be incorrect, as rather than rebounding, EUR fell to a low of 1.1556. Downward momentum is increasing, but not significantly. Today, EUR could dip below last week’s low of 1.1540, but based on the current momentum, a sustained decline below this level is unlikely. We do not expect the major support at 1.1490 to come into view. Resistance is at 1.1580; a breach of 1.1600 would indicate that the current mild downward pressure has eased.”
1-3 WEEKS VIEW: “Last Friday (10 Oct, spot at 1.1565), we stated that ‘the outlook for EUR remains negative, and it could decline further toward 1.1490.’ After EUR subsequently rebounded, we highlighted yesterday (13 Oct, spot at 1.1610) that ‘downward momentum is slowing, and the likelihood of EUR reaching 1.1490 during this phase of weakness is decreasing.’ We continue to hold the same view. Overall, only a breach of 1.1645 (‘strong resistance’ level previously at 1.1655) would indicate that the weakness in EUR from early last week has stabilised.”