He EUR/USD runs the risk of going lower as long as it stays below the 1.0820 level for now, notes Lee Sue Ann, economist at UOB Group, and Quek Ser Leng, Market Strategist.
24 hour perspective: “After the EUR fell to a low of 1.0746 on Wednesday, we indicated yesterday that price actions had led to further bearish momentum, although the Euro was unlikely to threaten next major support at 1.0700 today. In line with our expectations, the EUR continued to weaken yesterday, but did not break the main support at 1.0700 (the low was 1.0706). Although heavily oversold, the Euro could drop below 1.0700 today, but is unlikely to threaten next support at 1.0650. To the upside, a break of 1.0760 (minor resistance is at 1.0740) would indicate that it is not ready to head below 1.0700.”
Next 1-3 weeks: “We expected the EUR to weaken for more than 2 weeks. As the Euro fell, in our last article yesterday (May 25, pair at 1.0750), we stated that as long as the single currency did not break above 1.0820, it had room to weaken further to 10700. In London trading, the Euro fell to a low of 1.0706.Although we do not rule out a break of 1.0700, the selling of the last two weeks seems to have gone too far, both in terms of timing and prices. Otherwise, while we see room for the Euro to weaken further, it remains to be seen if it has enough momentum to clearly break below the next support at 1.0650. EUR weakness phase intact as long as it remains below 1.0790 (the ‘strong resistance’ level was yesterday at 1.0820).”
Source: Fx Street
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