FX Strategists at UOB Group now believe the door is open for EUR/USD to slip back and test the 2019 low in the 1.0880 region.
24-hour view: “We highlighted last Friday that ‘there is scope for EUR to test 1.0955 first before a recovery can be expected’. The pace and extent of the subsequent decline exceeded our expectation as EUR dropped to 1.0940 before ending the day on a weak note at 1.0943 (-0.34%). While the rapid drop appears to be running ahead of itself, there is no sign of stabilization just yet. From here, barring a move above 1.0980 (minor resistance at 1.0960), EUR is likely to edge lower towards 1.0910. Last year’s low at 1.0877 is unlikely to come into the picture for now.”
Next 1-3 weeks: “We highlighted last Friday (07 Feb, spot at 1.0980) that ‘downward momentum has improved further’ and added, ‘EUR could move towards 1.0945’. Our view was correct as EUR dropped quickly to a low of 1.0940. The subsequent weak closings (both daily and weekly) suggest further EUR weakness would not be surprising. The next support of note is at the 2019 low of 1.0877 (there is a minor support at 1.0910). In view of the solid downward momentum, 1.0877 appears to be within reach. Only a move back above 1.1010 (‘strong resistance’ level was at 1.1040 on Friday) would indicate the current downward pressure has eased.”