Instead of weakening further, the Euro (EUR) is more likely to trade in a range between 1.0910 and 1.0960. In the longer run, outlook for EUR remains negative; slowing momentum suggests that the probability of breaking the 1.0860/1.0885 support zone is not high, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
Low probability of breaking the 1.0860/1.0885 support zone
24-HOUR VIEW: “After EUR edged lower to 1.0936 two days, we indicated yesterday that ‘there has been a slight increase in momentum, and EUR is likely to continue to edge lower.’ We added, ‘it remains to be seen if it has enough momentum to break the major support at 1.0900.’ In NY trade, EUR dropped briefly to 1.0898, rebounding to close largely unchanged at 1.0935 (-0.04%). The rebound in oversold conditions and slowing momentum suggests that instead of weakening further, EUR is more likely to trade in a range, probably between 1.0910 and 1.0960.”
1-3 WEEKS VIEW: “We turned negative in EUR last Wednesday (02 Oct), when EUR was trading at 1.1065 (see annotations in the chart below). As we tracked the decline, in our update from yesterday (10 Oct, spot at 1.0940), we indicated that ‘the outlook for EUR remains negative, and the next level to watch is 1.0900.’ In NY trade, EUR dropped to 1.0898, rebounding to close largely unchanged. While the outlook remains negative, downward momentum appears to be slowing, and the probability of EUR breaking the significant support zone between 1.0860 and 1.0885 is not high for now. However, only a breach of 1.0995 (‘strong resistance’ level was at 1.1010 yesterday) would mean that the weakness in EUR has stabilised.”
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