EUR/USD: Further losses likely below 1.0820 – UOB

Economist Lee Sue Ann and Markets Strategist Que Ser Leang at UOB Group suggest further weakness remains likely in EUR/USD while below the 1.0820 level.

Key Quotes

24-hour view: “We highlighted yesterday that EUR ‘has to break clearly below the major support at 1.0750 before a sustained decline is likely’. We added, ‘The risk of EUR breaking clearly below 1.0750 will remain intact as long as it stays below 1.0805’. While EUR broke below 1.0750 as expected, it did not make further headway (low of 1.0746) as it rebounded to 1.0801 and then fell back to end the day on a soft note at 1.0748 (-0.19%). The price actions have resulted in an increase in downward momentum even though EUR is unlikely to threaten the next major support at 1.0700 today. On the upside, a breach of 1.0800 (minor resistance is at 1.0780) would indicate that EUR is not weakening further.”

Next 1-3 weeks: “Yesterday (24 May, spot at 1.0770), we indicated that EUR ‘has to crack 1.0750 in these 1 to 2 days for it to drop further to 1.0700’. In London trade, EUR broke below 1.0750 and dropped to 1.0746. Downward momentum has increased, albeit not much. From here, as long as 1.0820 (‘strong resistance level previously at 1.0835) is not breached, there is room for EUR to weaken further to 1.0700. If EUR breaks above 1.0820, it would indicate that the downward pressure that started two weeks ago has faded.”