EUR/USD: Diminishing bets for a drop to 0.9920 – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang noted a deeper drop in EUR/USD to the 0.9920 region seems to be losing momentum for the time being.

Key Quotes

24-hour view: “Last Friday, held the view that ‘there is scope for EUR to retest the 0.9950 level before the risk of a stronger rebound would increase’. However, EUR did not retest 0.9950 as it rebounded to a high of 1.0097 before closing on a firm note at 1.0087 (+0.71%). The rebound could extend but a sustained rise above the ‘strong resistance’ at 1.0120 appears unlikely. On the downside, a breach of 1.0040 (minor support is at 1.0065 would indicate that EUR is unlikely to rebound further.”

Next 1-3 weeks: “In our latest narrative from last Friday (15 Jul, spot at 1.0020), we highlighted that EUR could continue to drop, albeit at a slower pace. We noted that downward momentum has not improved by much and the odds for a sustained decline below 0.9920 are not high. EUR subsequently rebounded and closed higher by 0.71% (NY close of 1.0087), its largest 1-day advance in a month. Downward momentum is beginning to wane and this coupled with oversold conditions suggests that the odds for the weakness in EUR to extend to 0.9920 have diminished considerably. However, only a break of 1.0120 (no change in ‘strong resistance’ level from last Friday) would indicate that the weak phase in EUR that started more than two weeks ago has come to an end.”