Set to test the 1.1030 support – UOB Group

Euro (EUR) could continue to weaken; any decline is likely limited to a test of 1.1030. In the longer run, rapid buildup in downward momentum is likely to lead to EUR weakness; levels to monitor are 1.1030 and 1.1000, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

Levels to monitor are 1.1030 and 1.1000

24-HOUR VIEW: “We detected ‘a slight increase in downward momentum’ yesterday. We expected EUR to drift lower, but we held the view that ‘any decline is likely limited to a test of 1.1105.’ In a surprising move, EUR fell sharply, easily breaking below 1.1105. It also breached the major support at 1.1060, reaching a low of 1.1044. While oversold, the decline has not stabilised. Today, EUR could continue to weaken, but this time around, any decline is likely limited to a test of 1.1030. The major support at 1.1000 is unlikely to come under threat. Resistance levels are at 1.1085 and 1.1110.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (26 Sep, spot at 1.1130), wherein EUR ‘has likely entered a range trading phase, probably between 1.1060 and 1.1215.’ EUR rose above 1.1200 last Friday and again on Monday, but on both occasions, it retreated quickly. Yesterday, we indicated that ‘while the price action supports our view that EUR is trading in a range, after retreating from the upper limit of the expected 1.1060/1.1215 range, it could now test the lower end instead.’ However, instead of testing 1.1060, EUR broke below this level and reached a low of 1.1044. EUR closed at a 3-week low of 1.1067, down by 0.60%. Downward momentum is building rapidly, and this could lead to further EUR weakness. The levels to monitor are 1.1030 and 1.1000. To maintain the momentum buildup, EUR must not rise above 1.1150, the current ‘strong resistance’ level.”