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A bottom looks closer – UOB

FX Strategists remain bearish on EUR/USD, although they believe that a bottom could be in the making.

Key Quotes

24-hour view: “We expected EUR to ‘weaken further’ last Friday but were of the view ‘oversold conditions could limit any decline to a probe of the major 1.0810 support’. While EUR weaken as expected, it only touched a low of 1.0826. Downward momentum has waned and the downside risk appears to be limited for today. All in, EUR is expected to consolidate and trade sideways, likely between 1.0820 and 1.0860.”

Next 1-3 weeks: “EUR eked out a fresh ‘lower low’ of 1.0826 last Friday before closing at 1.0830 (-0.09%). While the weak phase that started more than a week ago is still intact, the combination of waning momentum and oversold conditions suggest that a bottom may not be far away. As highlighted early last Friday (14 Feb, spot at 1.0840), while a dip below 1.0810 (we first indicated this level last Monday) would not be surprising, the next support at 1.0770 could be out of reach. On the upside, a move above 1.0890 (‘strong resistance’ was at 1.0910 last Friday) would indicate the current weakness in EUR has run its course.”

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