EUR/USD: Further weakness on the cards – UOB

In the view of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, further losses could drag EUR/USD to the sub-1.0500 region in the next few weeks.

Key Quotes

24-hour view: “We expected EUR to weaken yesterday but we were of the view that ‘a sustained decline below 1.0615 is unlikely today’. EUR subsequently edged lower before dropping below 1.0615 in NY trade (low has been 1.0597). Downward momentum has improved, albeit not much. We continue to expect EUR to weaken, even though any decline is expected to encounter solid support at 1.0570. On the upside, a break of 1.0655 (minor resistance is at 1.0625) would indicate that the weakness in EUR has stabilized.”

Next 1-3 weeks: “We have held a negative EUR view since late last week. While our view was not wrong, the decline so far has been patchy. Yesterday (22 Feb, spot at 1.0650), we indicated that while EUR could break below 1.0615, it has to stay below this level before further weakness is likely. EUR took out 1.0615 in NY trade before closing at 1.0601 (-0.42%). The next support is at 1.0570; a clear break of this level could trigger a rapid drop, as the next significant support is some distance away at 1.0485. Overall, only a breach of 1.0690 (‘strong resistance’ level was at 1.0725 yesterday) would indicate EUR is not weakening further.”