EUR/USD under pressure, but 1.0635 could be out of reach – UOB

EUR/USD risks further downside, although a move to YTD lows at 1.0635 could be premature for the time being, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday that EUR ‘is likely to weaken to 1.0785’ but added, ‘the next support at 1.0750 is likely out of reach’. EUR subsequently dropped to 1.0771 before recovering. Downward pressure has eased with the rebound and the risk of a break of 1.0750 remains low. From here, EUR could edge higher towards 1.0860. For today, a move above 1.0900 is unlikely. On the downside, 1.0775 is acting as a strong support ahead of 1.0750.”

Next 1-3 weeks: “The ease by which EUR took out the strong support at 1.0840 came as a surprise (overnight low of 1.0819). The rapid decline and the subsequent weak daily closing in NY (1.0856, -0.96%) suggest there is room for EUR to weaken further in the coming days. At this stage, it is premature to expect EUR to revisit last month’s low at 1.0635 (there is a relatively strong support at 1.0700). Meanwhile, EUR is expected to stay under pressure unless it can move above 1.0980 (‘strong resistance’ level).”