Euro: Downside risks persist toward 1.1140 against US Dollar - UOB

UOB strategists Quek Ser Leang and Lee Sue Ann highlight renewed EUR/USD selling, with the pair dropping to 1.1164 before closing at 1.1195. While downside momentum has cooled, the Euro (EUR) remains vulnerable as long as resistance near 1.1265 holds. Over the coming weeks, they see scope for a test of 1.1140, though a deeper slide below that level is viewed as less likely for now.

Euro still biased lower but oversold

"24-HOUR VIEW: Two days ago, EUR rebounded to 1.1276 and closed 0.33% higher at 1.1258. Yesterday, we held the view that “there is scope for the rebound to extend but with no clear increase in upward momentum, any advance should stay within a 1.1220/1.1285 range.” We were incorrect, as EUR fell from 1.1264 to 1.1164. EUR rebounded from the low to close at 1.1195 (-0.56%). Downward momentum has slowed with the rebound, but EUR could revisit 1.1165 before a more sustained recovery is likely. The major support at 1.1145 is unlikely to come into view. Resistance is at 1.1220, followed by 1.1235."

"1-3 WEEKS VIEW: After holding a negative EUR view since the middle of last month, we highlighted yesterday (07 Oct, spot at 1.1255) that “downward momentum has slowed further.” However, we pointed out that “only a clear break above 1.1285 (‘strong resistance’ level) would indicate that the weakness in EUR has stabilised.” Although EUR subsequently dropped back down to 1.1164, downward momentum remains lackluster. However, as long as the ‘strong resistance’ (level is now at 1.1265) continues to hold, there is a chance for EUR to test 1.1140. Based on the prevailing momentum, the likelihood of a continued decline below this level is not high"

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