EUR can decline further to 1.0585 before stabilisation – UOB Group

Barring a break above 1.0660, EUR could decline further to 1.0585 before stabilisation can be expected. In the longer run, downward momentum remains strong; the focus is on 1.0555. The next technical objective below 1.0555 is at 1.0500, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The focus is on 1.0555

24-HOUR VIEW: “Yesterday, when EUR was at 1.0655, we highlighted that it ‘could decline further, but the major support at 1.0600 could be just out of reach.’ Our view of a lower EUR was correct, even though it fell more than expected to 1.0594, recovering to close at 1.0623 (-0.29%). Not surprisingly, after dropping sharply over the past few days, conditions are deeply oversold. However, the weakness has not stabilised. Today, barring a break above 1.0660 (minor resistance is at 1.0640), EUR could decline further to 1.0585 before stabilisation can be expected. This time around, the next major support at 1.0555 is likely out of reach.”

1-3 WEEKS VIEW: “Last Thursday (07 Nov, spot at 1.0730), we indicated that the steep selloff last Wednesday ‘suggests further EUR weakness’ and ‘the levels to watch are 1.0665 (low in Jun) and the year-to-date low of 1.0600 in April.’ Following a break below 1.0665 on Monday, we indicated yesterday (12 Nov, spot at 1.0655) that ‘We will continue to hold a negative EUR view as long as 1.0760 (‘strong resistance’ level) is not breached.’ We added, ‘if EUR breaks below 1.0600, the focus will shift to 1.0555.’ In NY trade, EUR broke below 1.0600 and reached 1.0594. While conditions are oversold, downward momentum remains strong. As indicated, the focus is now on 1.0555. On the upside, the ‘strong resistance’ level has moved lower to 1.0705 from 1.0760. Looking ahead, if EUR were to break below 1.0555, the next technical objective lies at 1.0500.”