EUR/USD: Further weakness likely below 1.1070 – UOB

24-hour view: We did not anticipate the surge in volatility in EUR yesterday. After rising to a high of 1.1143, EUR sold off sharply and plunged to 1.0964. Unsurprisingly, the sharp and swift drop is oversold. However, the weakness has not stabilised just yet. Today, EUR could drop below the major support near 1.0965, but it might not be able to maintain a foothold below this level. The next support at 1.0920 is unlikely to come into view. Resistance is at 1.1010, followed by 1.1035.

Next 1-3 weeks: Our latest narrative was from two days ago (26 Jul, spot at 1.1050), wherein, while EUR “could dip below 1.1010, the probability of it dropping to the next major support at 1.0965 is not high for now.” Yesterday, EUR rose above our ‘strong resistance’ level of 1.1135 (high was 1.1143) before plunging to a low of 1.0965 (unfortunately, we were unable to anticipate the spike in volatility). From here, EUR must break and stay below 1.0965 before further EUR weakness is likely. The risk of EUR breaking clearly below 1.0965 will remain intact as long as it stays below 1.1070 in the next couple of days. Looking ahead, the next levels to watch below 1.0965 are at 1.0920 and 1.0865.