EUR/USD: Door open to a probable drop to 0.9500 – UOB

The continuation of the downtrend could drag EUR/USD to the 0.9500 region in the next weeks, note FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We did not expect the outsized drop in EUR of 1.48% (NY close of 0.9690) last Friday (we were expecting range-trading). EUR plummeted briefly below 0.9600 during Asian hours before snapping back up. Despite the bounce, the weakness in EUR has not stabilized. In other words, EUR could weaken further even though 0.9500 is unlikely to come under threat for now. Resistance is at 0.9700 and 0.9740.”

Next 1-3 weeks: “We have held a negative EUR view for more than a week now. As EUR dropped, in our latest narrative from last Thursday (22 Sep, spot at 0.9830), we indicated that EUR is likely to continue to head lower in the coming days. We stated ‘the levels to watch are at 0.9770 and 0.9720’. On Friday (23 Sep), EUR sliced through both 0.9770 and 0.9720. EUR extended its decline during Asian hours today. The impulsive and outsized drop suggests EUR could continue to weaken, possibly to 0.9500. On the upside, a breach of 0.9810 (‘strong resistance’ level was at 0.9940 last Friday) would indicate that the current weakness in EUR has stabilized.”