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EUR/USD: The next support is at 1.0515 – UOB

Deeper decline could drag EUR/USD towards 1.0515 area in the coming weeks, say Lee Sue Ann, Economist at UOB Group, and Quek Ser Leang, Market Strategist.

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24 hour view: The sharp decline that took EUR/USD to 6-month lows at 1.0629 was a surprise (we expected EUR/USD to trade in a range). Although the decline appears to have been exaggerated, EUR/USD weakness has not stabilized. Today, EUR/USD could continue to decline, but it is unlikely to break clearly below 1.0600. Resistance lies at 1.0665, while a break of 1.0690 would mean EUR/USD will not weaken further.

Next 1-3 weeks: On Tuesday (September 12, EUR/USD at 1.0750), we indicated that “EUR/USD weakness has stabilized”, and we were of the opinion that “EUR/USD is likely to trade in a range between 1.0690 and 1.0820”), We highlighted that “looking ahead, if EUR/USD breaks and sustains below 1.0690, the risk of a drop towards the main support at 1.0635 will increase.” During the London session, EUR/USD not only broke below 1.0690, but also fell slightly below the May low of 1.0635 (low was 1.0629). The sharp increase in momentum suggests that EUR/USD has resumed its weakness. However, it remains to be seen if there is enough momentum to take EUR/USD further below the March low near 1.0515. To maintain momentum, EUR/USD must stay below 1.0730, the current “strong resistance” level. This level will move lower in the coming days.

Source: Fx Street

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