Currency strategists at UOB Group note that the EUR / USD could extend downward move below 1.1800 In the next weeks.
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24 hour view: “Yesterday, we expected EUR / USD to ‘trade sideways within a 1.1835 / 1.1885 range.’ We do not anticipate the rapid rise in volatility as EUR / USD briefly rose to 1.1894 before sinking to 1.1805. The rapid decline appears to be ahead of itself, the strong momentum to the downside suggests that a breakout of the main support at 1.1800 would not be surprising. However, the next support at 1.1780 is likely to be out of reach for now. On the upside , a breakout of 1.1865 (minor resistance is at 1.1850) would indicate that the current weakness has stabilized. “
Next 1-3 weeks: “We turned negative on the EUR / USD last Thursday (July 1, EUR / USD at 1.1855) where we indicated that ‘the EUR / USD is expected to trade with a downward bias towards 1.1800’. After the EUR / USD to rebound from 1.1805, we highlighted on Monday (July 5, EUR / USD at 1.1860) that ‘the outlook for EUR / USD to move below 1.1800 has diminished.’ Furthermore, we add, “to rejuvenate the current momentum , the EUR / USD has to move and stay below 1.1835 in these 1-2 days. “That said, we were not quite expecting the sharp drop the day before to 1.1805. The downside momentum has rejuvenated and a breakout of 1.1800 would open the way for EUR / USD to weaken to 1.1780. Current weakness is considered intact as long as EUR / USD does not move above 1.1895 (‘strong resistance level’ was previously at 1.1915). “
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