EUR/USD risks further weakness near term – UOB

UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang suggest EUR/USD could slip back to the 1.0800 region in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the underlying tone has softened somewhat and EUR is likely to edge lower’. We added, ‘any decline is likely part of a lower range of 1.0835/1.0890’. While our view of a lower EUR was correct, it weakened more than expected as it dropped to a low of 1.0808 before recovering slightly to end the day at 1.0839 (-0.20%). Downward momentum has improved, albeit not much. Today, as long as EUR stays below 1.0870 (minor resistance is at 1.0855), it could test the major support at 1.0800 before stabilizing. The next support at 1.0750 is unlikely to come under threat.”

Next 1-3 weeks: “Three days ago (15 May, spot at 1.0850), we indicated that ‘the outlook for EUR remains negative and the level to watch is 1.0800’. Yesterday (17 May), EUR fell to a low of 1.0808. While downward momentum has not increased much, the risk for EUR remains on the downside. However, it has to break clearly below 1.0800 before further decline to 1.0750 is likely. On the upside, a breach of 1.0900 (‘strong resistance’ level was at 1.0935 yesterday) indicates that the weakness in EUR that started a week ago has stabilized.”