The EUR is expected to decline gradually, potentially reaching 1.0825. Long-term, to reach significant support at 1.0770, the EUR must continue to decline, or the probability of it reaching this level will decrease rapidly, note UOB Group FX analysts Quek Ser Leang and Peter Chia.
Bearish momentum may be short-lived
24 HOUR VIEW: “We expected the EUR to move lower yesterday, but indicated that ‘due to mild momentum, any decline is unlikely to break clearly below 1.0860.’ Our anticipation that the EUR would weaken was correct, but we underestimated the decline as it dropped to a low of 1.0853. The bearish momentum has increased, although not by much. Today, we still expect the EUR to decline gradually, potentially to 1.0825. “The main support at 1.0770 comes into play. To the upside, resistance levels are at 1.0880 and 1.0900.”
1-3 WEEK VIEW: “Our most recent narrative was from two days ago (Oct 16, spot at 1.0905), where we indicated that “the slight increase in momentum suggests there is a chance for the EUR to break below 1.0860/1.0885 support zone, but it remains to be seen if it can maintain a foothold below these levels.’ Yesterday, the EUR fell below the support zone, reaching a low of 1.0853. While we would prefer a more definitive breakout, the price action suggests that the EUR weakness that began earlier this month remains intact. The next significant support level is some distance away at 1.0770. To reach this level, the EUR must continue to decline, or the probability of it reaching this level will decrease rapidly. Conversely, a break of ‘strong resistance’ at 1.0935 (the level was at 1.0950 yesterday) would mean that weakness has stabilized.”
Source: Fx Street
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