EUR/USD risks a deeper retracement – UOB

In the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, further weakness could drag EUR/USD to the 1.0615 region in the next few weeks.

Key Quotes

24-hour view: “Yesterday, we held the view that EUR could dip below 1.0700 before stabilization is likely. We highlighted that the next major support at 1.0615 is not expected to come into view and there is another support at 1.0670. Our view was not wrong as EUR dipped to 1.0665 in NY, rebounded to trade choppily before ending the day little changed at 1.0723 (-0.07%). EUR appears to have entered a consolidation phase and it is likely to trade between 1.0680 and 1.0780 today.”

Next 1-3 weeks: “On Monday (06 Feb, spot at 1.0795), we indicated that the pullback in EUR could extend to 1.0700. As EUR declined, we highlighted yesterday (07 Feb, spot at 1.0725) further EUR weakness is likely but oversold short-term conditions could slow the pace of any further decline. We noted, the next level to monitor is at 1.0615. EUR dropped to a low of 1.0665 in NY trade and we continue to hold the same view. The downside risk in EUR is intact as long as it does not break above 1.0850 (no change in ‘strong resistance’ level).”