The Euro (EUR) could test the 1.0800 level before a recovery can be expected; major support at 1.0770 is not expected to come into view. In the longer run, to reach the significant support at 1.0770, EUR must keep moving lower, or the likelihood of it reaching this level will diminish quickly, UOB Group’s FX analysts Quek Ser Leang and Peter Chia notes.
Below 1.0800 EUR must reach 1.0770
24-HOUR VIEW: “We expected EUR to ‘decline gradually, potentially reaching 1.0825’ yesterday. Instead of declining gradually, EUR fell sharply in London trading, reaching a low of 1.0810. Conditions are severely oversold after the rapid drop, but today, EUR could test the 1.0800 level before a recovery can be expected. The major support at 1.0770 is not expected to come into view. Resistance levels are at 1.0845 and 1.0870.”
1-3 WEEKS VIEW: “We continue to hold the same view as yesterday (17 Oct, spot t 1.0860). As highlighted, the weakness in EUR that started early this month remains intact. However, to reach the significant support at 1.0770, EUR must keep moving lower, or the likelihood of it reaching this level will diminish quickly. The subsequent drop to 1.0810 increases the odds of a decline to 1.0770. On the upside, a breach of 1.0900 (‘strong resistance’ level was at 1.0935 yesterday) would mean that the weakness has stabilised.”
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