EUR/USD: Unlikely to break the major support at 1.1055 – UOB Group

Scope for Euro (EUR) to weaken further against the US Dollar (USD); any decline is unlikely to break the major support at 1.1055. In the longer run, EUR remains under pressure, but it remains to be seen if the current corrective pullback can reach 1.0945, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

EUR remains under pressure

24-HOUR VIEW: "EUR plunged and closed at a 1-1/2-month low of 1.1087 yesterday, down by a whopping 1.42%. Not surprisingly, the sharp and swift selloff is deeply oversold. However, with no signs of stabilisation just yet, there is scope for USD to weaken further. That said, given the oversold conditions, any decline is unlikely to break the major support at 1.1055. Resistance is at 1.1120; a breach of 1.1150 would suggest the weakness in EUR has stabilised."

1-3 WEEKS VIEW: "Last Friday, 09 May, when EUR was at 1.1220, we revised our view from neutral to negative, highlighting that 'the buildup in momentum indicates further decline in EUR toward 1.1145.' The pace of the anticipated decline exceeded our expectations, as EUR plunged and reached a low of 1.1064 yesterday. While downward momentum has increased and EUR remains under pressure, we view the current weakness as part of a corrective pullback (see 1-3 months view below), and it remains to be seen if the next major support at 1.0945 will come into view. Overall, only a breach of 1.1225 (‘strong resistance’ level previously at 1.1315) would suggest that the current downward pressure has eased."