EUR/USD: A break below 1.0650 appears unlikely – UOB

UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang suggest a drop to 1.0650 and below seems not favoured in EUR/USD for the time being.

Key Quotes

24-hour view: “We highlighted last Friday that EUR ‘could dip below 1.0700 but it is unlikely to threaten the next support at 1.0650’. We added, ‘a breach of 1.0760 would indicate that EUR is not ready to head below 1.0700’. Instead of dipping below 1.0700, EUR rose to 1.0758, dropped to 1.0700, and then rebounded to close little changed at 1.0724 (+0.05%). Downward pressure has eased and EUR is unlikely to weaken much further. Today, we expect EUR to trade sideways, likely between 1.0700 and 1.0750.”

Next 1-3 weeks: “Our update from last Friday (26 May, spot at 1.0725) still stands. As highlighted, the selloff in EUR that started about 2-1/2 weeks ago appears to be overextended, both in terms of time and price. While EUR could still drop below the major support at 1.0700, it remains to be seen if it has enough momentum to break clearly below the next support at 1.0650. All in all, only a breach of 1.0775 (‘strong resistance’ level was at 1.0790 last Friday) would suggest that the weakness in EUR has stabilized.”