EUR/USD risks a sharp drop below 1.0340 – UOB

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UOB Group currency strategists Quek Ser Leang and Lee Sue Ann have suggested that the EUR/USD could pull back to 1.0300 and 1.0200 in case it breaks below 1.0340.

Key comments

24 hour view: “Although we expected EUR/USD to weaken yesterday, we were of the opinion that ‘chance of breaking major support at 1.0470 is not high’. However, EUR/USD broke major support and tumbled to as low as 1.0352. Weakness, deeply oversold, has room to drop below 1.0340 before hoping for stabilization (next support is at 1.0300. Resistance is at 1.0430, followed by 1.0460.”

Next 1-3 weeks: “Last Friday (May 6, EUR/USD at 1.0540), we highlighted that EUR/USD needs to close below strong support at 1.0470 before a sustained decline is likely. Yesterday (May 12, EUR /USD at 1.0515), we indicated that ‘no change in our opinion for now, although the short-term bearish momentum has weakened a bit and the possibility of EUR/USD closing below 1.0470 has increased slightly.’ This, we expected the reaction after the break of 1.0470, as the EUR/USD tumbled to a low of 1.0352.From here, a break of the 2017 low near 1.0340 could trigger a further sharp decline. Support is at 1.0300 and 1.0200. Overall, only a break of 1.0490 (‘strong resistance’ level was 1.0605 yesterday) would indicate that the current EUR/USD weakness has stabilised.”

Source: Fx Street

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