Euro: Downside bias toward 1.1400 against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann keep a negative stance on EUR/USD after the pair closed at 1.1447. They see scope for further Euro (EUR) weakness, with intraday support at 1.1415 and a key level at 1.1400, though they doubt a sustained break lower. On a 1–3 month view, moving averages point to building downside momentum with 1.1400 as next daily support.

Euro pressured but downside limited

"24-HOUR VIEW: EUR rose to 1.1495 two days ago and then pulled back to close at 1.1464. Yesterday, we noted that “there has been a slight increase in downward momentum,” and we expected EUR “to edge lower.” We added, “given the mild momentum, EUR is unlikely to reach 1.1435.” The anticipated decline exceeded our expectations as EUR dropped to a low of 1.1428. EUR closed 0.13% lower at 1.1447. While EUR could continue to drop today, as there has been no clear increase in downward momentum, this time around, we are of the view that any decline is unlikely to reach 1.1400. Note that there is a minor support at 1.1415. Resistance is at 1.1460, followed by 1.1475."

"1-3 WEEKS VIEW: We have been holding a negative EUR view since early last week (see annotations in the chart below). In our most recent narrative from last Thursday (17 Sep, spot at 1.1470), we indicated that EUR “could continue to decline to 1.1435, with potential extension to 1.1400.” After trading in a range for a few days, EUR fell and broke below 1.1435 yesterday, reaching a low of 1.1428. Despite breaking below 1.1435, downward momentum has not increased significantly. However, as long as EUR holds below 1.1490 (‘strong resistance’ level previously at 1.1520), there is a chance for EUR to test 1.1400. Based on the prevailing momentum, the odds of a continued decline below this level are not high."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)