EUR/USD now seen within a consolidative range – UOB

24-hour view: Our view that EUR could trade in a range yesterday was incorrect, as it soared to 1.0736, plunged to 1.0648, and then closed at 1.0659 (-0.17%). The sharp and swift drop appears to be overdone, but with no signs of stabilisation just yet, EUR could dip below the major support at 1.0630 before stabilisation is likely. The next support at 1.0590 is unlikely to come under threat. On the upside, a breach of 1.0700 (minor resistance is at 1.0675) would indicate that EUR is not weakening further.

Next 1-3 weeks: Two days ago (19 Sep, spot at 1.0690), we indicated that “downward momentum is beginning to wane.” We added, “in order to keep the momentum going, EUR must break and stay below 1.0630 in the next couple of days, or the odds of further decline will diminish rapidly.” Yesterday, EUR broke above our ‘strong resistance’ level of 1.0730 (high of 1.0736) before dropping back down quickly. Downward pressure appears to have eased. From here, EUR is likely to trade in a range of 1.0590/1.0730. Looking ahead, if EUR breaks clearly below 1.0590, it will likely lead to a sustained decline towards the major support at 1.0515.