EUR/USD could weaken below 1.0500 – UOB

Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group hinted at the likelihood that EUR/USD could revisit the 1.0485 level in the next few weeks.

Key Quotes

24-hour view: “Our view last Friday was that ‘the bias for EUR is still on the downside even though it remains to be seen if it can maintain a foothold below the major support at 1.0570’. EUR cracked 1.0570 easily and dropped to 1.0534 before settling at 1.0546 (-0.46%). While downward momentum is showing tentative signs of slowing, EUR could dip to 1.0520 before stabilizing. The major support at 1.0485 is unlikely to come into view today. On the upside, a breach of 1.0600 (minor resistance is at 1.0580) would indicate that the weakness in EUR has stabilized.”

Next 1-3 weeks: “We have expected EUR to weaken for more than a week now. In our latest narrative from last Friday, we indicated EUR ‘is likely to weaken further’. We added, ‘a break of the major support at 1.0570 could trigger a rapid drop, as the next significant support is some distance away at 1.0485’. EUR took out 1.0570 in Ldn trade even though the subsequent decline was not as sharp as expected. However, as long as EUR stays below 1.0625 (‘strong resistance’ level was at 1.0670 last Friday), it is likely to continue to weaken toward 1.0485.”