EUR/USD risks a drop to 1.0550 – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang suggested EUR/USD could revisit the 1.0550 area in the next weeks.

Key Quotes

24-hour view: “While we expected EUR to weaken yesterday, we were of the view that ‘a sustained drop below 1.0670 is unlikely’. The anticipated weakness exceeded our expectations as EUR dropped to a low 1.0634. EUR could weaken further but conditions remain oversold and while it could drop below 1.0600, it may not be able to maintain a foot hold below this level (next support is at 1.0550). Resistance is at 1.0675 but only a break of 1.0700 would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “We turned negative in EUR yesterday (26 Apr, spot at 1.0710) and we were of the view that ‘a break of the Mar 2020 low of 1.0635 would not be surprising’. Our view was not wrong as EUR dropped to a low of 1.0634 during NY session. Downward momentum is strong and we continue to expect EUR to weaken, possibly to 1.0550. On the upside, the ‘strong resistance’ at 1.0760 (level was at 1.0820 yesterday) is unlikely to come under threat, at least within these 1 to 2 days.”