UOB Group’s FX Strategists noted EUR/USD risks further decline in the near term.
24-hour view: “We expected EUR to ‘weaken further’ yesterday but we were of the view that ‘oversold conditions suggest that 1.1920 is unlikely to come into the picture’. The subsequent EUR weakness exceeded our expectation as it plummeted to 1.1890. Conditions remain oversold and while EUR could weaken further, a clear break of the major long-term support at 1.1855 would come as a surprise. Resistance is at 1.1945 followed by 1.1970.”
Next 1-3 weeks: “Yesterday, (17 Jun, spot at 1.1985), we highlighted that EUR ‘is likely to weaken further even though it is left to be seen if it can break the major long-term support at 1.1920’. The ease and speed by which EUR cracked 1.1920 came as a surprise as is plummeted to 1.1890. The focus has shifted to the next long-term support at 1.1855. A break of this level could potentially trigger further sharp decline as the next support level of note is further down at the April’s low near 1.1700. All in, the risk remains on the downside and only a break of 1.2005 (‘strong resistance’ level was at 1.2080 yesterday) would indicate that the downside risk that started earlier this week has run its course.”