It is expected that a further drop in EUR/USD find tough containment around 1.1010, suggest economist Lee Sue Ann and market strategist Quek Ser Leang of UOB Group.
24 hour perspective: After the EUR fell to 1.1173 and bounced, we highlighted yesterday that the underlying tone still looked soft and held the view that there was a chance the EUR could retest the 1.1175 level before the risk of a more sustained bounce increased. Instead of testing 1.1175, the EUR broke below this level and plunged as low as 1.1117. The strong fall seems to have a run. However, the oversold conditions suggest a sustained decline below 1.1090 is unlikely. The main support at 1.1010 is also not likely to be threatened. Resistance at 1.1170 and 1.1200.
Next 1-3 weeks: After staying positive on the EUR for over a week, we highlighted yesterday that the upside momentum had eased considerably, although we added that only a clear break of 1.1160 would suggest that the EUR is not strengthening further. In NY trading, the EUR not only broke below 1.1160, but sold off hard as well, ending the day down 0.63% (1.1128). The drop of 0.63% is the largest in one day for two months. Short-term bearish momentum has increased, but although the Euro could weaken further, any decline is likely to face solid support at 1.1010. Another way of looking at it is that any Euro weakness is likely to be a corrective pullback, not a major reversal. The bearish pressure will remain intact unless it breaks below the ‘strong resistance’ level, currently at 1.1235.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
