EUR/USD: A test of 1.0635 remains off the table in the near term – UOB

FX Strategists at UOB Group noted EUR/USD stays weak although a move to YTD lows looks unlikely in the short-term horizon.

Key Quotes

24-hour view: “We expected EUR to weaken yesterday but held the view that it is ‘unlikely to threaten the strong support at 1.0840’. The subsequent weakness exceeded our expectation as EUR slumped to an overnight low of 1.0819. The breach of the strong support coupled with improved downward momentum suggests EUR is likely to weaken further towards 1.0785. For today, the next support at 1.0750 is likely out of reach. Overall, the current downward pressure in EUR is deemed intact unless it can recover back above 1.0900 (minor resistance is at 1.0870).”

Next 1-3 weeks: “The ease by which EUR took out the strong support at 1.0840 came as a surprise (overnight low of 1.0819). The rapid decline and the subsequent weak daily closing in NY (1.0856, -0.96%) suggest there is room for EUR to weaken further in the coming days. At this stage, it is premature to expect EUR to revisit last month’s low at 1.0635 (there is a relatively strong support at 1.0700). Meanwhile, EUR is expected to stay under pressure unless it can move above 1.0980 (‘strong resistance’ level).”