Further decline in EUR/USD looks likely and could retest the 1.0450 and 1.0410 levels in the next weeks, suggest Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
Key Quotes
24-hour view: “Our expectations for EUR to range-trade were incorrect as it dropped sharply and closed at a 1-month low of 1.0520 (-0.75%). The decline gained considerable momentum and EUR is likely to weaken further. That said, the major support at 1.0450 is likely out of reach today (minor support is at 1.0485). Resistance is at 1.0545, followed by 1.0580.”
Next 1-3 weeks: “We highlighted yesterday (05 Jan, spot at 1.0610) that downward momentum is beginning to build and we held the view that EUR is likely to trade with a downward bias but expect solid support at 1.0510. In NY trade, EUR dropped sharply and came close to 1.0510 (low of 1.0513). Downward momentum has improved further and a break of 1.0510 would not be surprising. In view of the improved momentum, EUR could weaken to the next support at 1.0450, possibly 1.0410. On the upside, a break of 1.0630 (‘strong resistance’ level was at 1.0675 yesterday) would indicate that downward pressure has eased.”