UOB’s Quek Ser Leang highlights renewed EUR/USD weakness after a sharper-than-expected drop below 1.1565 to 1.1522. He sees scope for a further test of 1.1520 intraday, with 1.1490 as the next key support over the coming weeks. The negative view holds as long as resistance at 1.1600 caps rebounds, despite earlier guidance that a clear break of 1.1565 was unlikely.
Euro slide extends toward key supports
“24-HOUR VIEW: EUR fell sharply to 1.1568 last Friday and then rebounded. When EUR was at 1.1590 in the early Asian session yesterday, we stated that “there is scope for EUR to test the major support at 1.1565.” We added that “a clear break below this level appears unlikely.” Our directional call was not wrong, but we did not expect EUR to break below 1.1565 and plunged to 1.1522. EUR rebounded from the low to close 0.44% lower at 1.1547. Despite the rebound, the sharp decline has not quite stabilised. Today, there is a chance for EUR to drop to 1.1520 before a more sustained rebound can be expected. The next support at 1.1490 is unlikely to come under threat. Resistance is at 1.1565, followed by 1.1580.”
“1-3 WEEKS VIEW: Our most recent narrative was from last Friday (11 Sep, spot at 1.1625), when we highlighted that “if EUR closes below 1.1585, it would increase the odds of a break below the major support at 1.1565.” However, we did not anticipate the sharp increase in downward momentum, as EUR broke decisively below 1.1565 yesterday and plunged to a low of 1.1522. The sharp increase in momentum suggests EUR could decline toward 1.1490. We will maintain our negative EUR view as long as 1.1600 (‘strong resistance’ level was 1.1635 yesterday) is not breached.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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