EUR/USD: Further decline likely below 1.0630 – UOB

24-hour view: We expected EUR to consolidate in a range of 1.0645/1.0695 yesterday. EUR then traded in a range of 1.0653/1.0698 before closing at 1.0690 (+0.33%). The underlying tone has firmed somewhat, and there is room for EUR to edge higher today. However, any advance is unlikely to break the strong resistance at 1.0730. On the downside, if EUR drops below 1.0655 (minor support is at 1.0675), it would indicate that the current mild upward pressure has faded. 

Next 1-3 weeks: After EUR plummeted to a low of 1.0629, in our latest narrative from last Friday (15 Sep, spot at 1.0640), we highlighted that there had been a sharp increase in downward momentum. We held the view that EUR “has likely resumed its weakness, but it remains to be seen if it can reach March’s low near 1.0515 this time around.” Since then, EUR has not been able to make further headway on the downside. Downward momentum is beginning to wane. In order to keep the momentum going, EUR must break and stay below 1.0630, or the odds of further decline will diminish rapidly. Conversely, if EUR breaks above 1.0730 (no change in ‘strong resistance’ in level from yesterday), it would also mean that EUR is not weakening further.