Despite recent price action, a sustained drop below 0.9900 in EUR/USD looks unlikely for now, according to UOB Group currency strategists Lee Sue Ann and Quek Ser Leang.
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24 hour view: “We did not anticipate the strong sell-off in EUR/USD during the New York session yesterday. EUR/USD outsized drop has room to drop below 0.9930 before stabilization is likely. Next support unlikely at 0.9900 is threatened. To the upside, breakout of 1.0050 (minor resistance is at 1.0010) would indicate current weakness has stabilized.”
Next 1-3 weeks: “EUR/USD tumbled yesterday and the break of our ‘strong support’ level at 1.0030 has invalidated our view on further EUR/USD strength. The drop looks overdone, but there is room for EUR/USD to break.” weaken to 0.9900. At this point, a sustained decline below this level seems unlikely. All in all, as long as the “strong resistance” level of 1.0070 is not breached, the EUR/USD is likely to remain under pressure.”
Source: Fx Street
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