The EUR/USD could slip back to 1.0515, UOB

Further downside could drag EUR/USD to the 1.0515 region in the next few weeks, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: We did not anticipate the sharp selloff that sent the EUR plummeting to a low of 1.0572. The sharp drop is, unsurprisingly, oversold, but the EUR could drop further to 1.0555 before stabilization is likely. The major support at 1.0515 is unlikely to be tested today. On the upside, if the EUR breaks above 1.0635 (minor resistance is at 1.0615), it would mean that the weakness in the EUR has stabilized.

Next 1-3 weeks: Our most recent narrative was from last Thursday (21 Sep, spot at 1.0655), wherein the EUR is likely to trade in a range of 1.0590/1.0730 for now. We were also of the view that “if the EUR breaks clearly below 1.0590, it will likely lead to a sustained decline towards the major support at 1.0515.” Yesterday (Sept. 25), the EUR broke below 1.0590, dropped to 1.0572, and then closed at 1.0590 (-0.58%). The price action suggests that the EUR is likely to weaken to 1.0515 in the coming days. The EUR’s downside risk remains if it stays below the ‘strong resistance’ level, currently at 1.0665.

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