FX Strategists at UOB Group expect further downside in EUR/USD if the 1.1230 level is cleared.
24-hour view: “We expected EUR to ‘ease slightly’ yesterday but were of the view that ‘a sustained decline below 1.1330 is unlikely’. However, EUR gave up all of its outsized gains from Monday and plummeted to an overnight low of 1.1273. While quickly reaching oversold conditions, the rapid drop appears to have room to move below the overnight low. That said, the prospect for EUR to break the strong support level at 1.1230 is not high, at least for today. On the upside, only a move above 1.1390 would indicate the current short-term downward pressure has eased (minor resistance is at 1.1350).”
Next 1-3 weeks: “We highlighted yesterday (10 Mar, spot at 1.1410) that ‘while there is no sign of a top just yet, EUR has to close above 1.1500 in order to indicate it has enough momentum to move to 1.1580’. We added, ‘meanwhile, EUR could consolidate for a couple of days’. Instead of consolidating, EUR surrendered all of Monday’s (09 Mar) strong gains as it plummeted to an overnight low of 1.1273. Upward momentum has been dented and EUR has to move and stay above 1.1390 within these 1 to 2 days or a break of 1.1230 (no change in ‘strong support’ level) would indicate that the rally that started in late February has found a top at Monday’s high of 1.1496.”