EUR/USD: A drop to 1.0615 should not be ruled out – UOB

According to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, EUR/USD risks a potential drop to the 1.0615 level in the next few weeks.

Key Quotes

24-hour view: “Yesterday, we held the view that EUR ‘appears to have entered a consolidation phase and it is likely to trade between 1.0680 and 1.0780’.  Our view for consolidation was not wrong but EUR traded within a narrower range than expected (1.0708/1.0760). The underlying tone has softened somewhat. While EUR is likely to edge lower today, it is unlikely to break 1.0665 (minor support is at 1.0690). On the upside, a breach of 1.0760 (minor resistance is at 1.0740) would indicate that the current mild downward pressure has eased.”

Next 1-3 weeks: “Our narrative from two days ago (07 Feb, spot at 1.0725) still stands. As highlighted, further EUR weakness is likely but oversold short-term conditions could slow the pace of any further decline. The next level to monitor is at 1.0615. The downside risk in EUR is intact as long as it does not break above 1.0810 (‘strong resistance’ level was at 1.0850 yesterday).”