The Euro (EUR) is expected to edge lower; due to mild momentum, any decline is unlikely to break clearly below 1.0860. In the longer run, chance of EUR breaking below the major support zone of 1.0860/1.0885; it remains to be seen if it can maintain a foothold below these levels, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
EUR can break below of 1.0860/1.0885
24-HOUR VIEW: “We highlighted yesterday that EUR ‘could dip to 1.0885 before the risk of a more sustained rebound is likely.’ We added, ‘the next support at 1.0860 is unlikely to come into view.’ Our view was not wrong, as EUR edged lower to 1.0881, closing at 1.0890 (-0.17%). There has been a slight increase in momentum. Today, we expect EUR to edge lower, but due to the mild momentum, any decline is unlikely to break clearly below 1.0860. Resistance is at 1.0900; a breach of 1.0915 would indicate that the current mild downward pressure has faded.”
1-3 WEEKS VIEW: “We highlighted yesterday (15 Oct, spot at 1.0905) that ‘the slight increase in momentum suggests there is a chance of EUR breaking below the support zone of 1.0860/1.0885, but it remains to be seen if it can maintain a foothold below these levels.’ EUR then dipped to a low of 1.0886. We continue to hold the same view. Looking ahead, the next support level below the support zone is at 1.0775. At this time, the likelihood of EUR declining to this level is low. On the upside, a breach of 1.0950 (‘strong resistance’ level was at 1.0960 yesterday) would indicate that the weakness in EUR that started early in this month has stabilised.”