EUR/USD must first close below 1.1200 to continue falling – UOB Group

Further weakness is not ruled out; it is unclear whether Euro (EUR) can break and hold below 1.1200 against US Dollar (USD). In the longer run, to continue to decline, EUR must first close below 1.1200, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Further weakness is not ruled out

24-HOUR VIEW: "EUR dropped to 1.1321 two days ago. In the early Asian session yesterday, when EUR was at 1.1335, we highlighted that 'despite declining, EUR has not gained much momentum.' We expected EUR to 'consolidate between 1.1305 and 1.1375.' However, instead of consolidating, EUR edged down to close at 1.1292 (-0.32%). In the early Asian session today, EUR plunged (the low so far appears to be 1.1209). Further weakness is not ruled, but the sharp drop seems excessive, and it is unclear whether EUR can break and hold below 1.1200. For now, the major support at 1.1140 is unlikely to come under threat. On the upside, resistance levels are at 1.1275 and 1.1300."

1-3 WEEKS VIEW: "We revised our EUR view from positive to neutral yesterday (28 May, spot at 1.1335), indicating that 'upward momentum has mostly dissipated.' We also indicated that EUR 'is likely to trade in a 1.1255/1.1420 range for now.' Although our revision was timely, we did not expect EUR to drop below 1.1255 early today. To continue to decline, EUR must first close below 1.1200. The risk of EUR closing below 1.1200 will remain intact provided that the ‘strong resistance’ level, currently at 1.1355 is not breached. Looking ahead, below 1.1200, there is a significant support level at 1.1140 (the current level of the 55-day EMA indicated in the 1-3 months view below)."