Instead of declining further, EUR is more is likely to trade in a 1.0275/1.0355 range. In the longer run, EUR has to break clearly below 1.0255 before further losses can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
EUR/USD is more is likely to trade in a 1.0275/1.0355 range
24-HOUR VIEW: “After EUR rose to 1.0434 two days ago and then pulled back sharply, we noted yesterday that ‘there has been a slight increase in downward momentum.’ We expected EUR to ‘edge lower and test 1.0320,’ but we were of the view that ‘the major support at 1.0300 is unlikely to come under threat.’ While our view of a lower EUR was correct, the price action did not turn out as we expected, as EUR plummeted to a low of 1.0273. It then recovered quickly to close lower by 0.20% at 1.0318. The brief decline did not result in a significant increase in downward momentum. Instead of declining further today, EUR is more likely to trade in a 1.0275/1.0355 range.”
1-3 WEEKS VIEW: “On Tuesday (07 Jan, spot at 1.0380), we indicated that ‘the near-term bias is tilted to the upside, even though any advance is likely part of a higher trading range of 1.0300/1.0465.’ We were also of the view that EUR ‘is unlikely to break clearly above 1.0465.’ Yesterday, EUR broke briefly below 1.0300 before rebounding. Downward momentum is beginning to build, albeit tentatively. From here, EUR has to break clearly below 1.0255 before further losses can be expected. The likelihood of EUR breaking clearly below will increase in the next few days, provided that the ‘strong resistance’ level, currently at 1.0400, is not breached.”
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