EUR/USD: Downward bias loses momentum – UOB

Extra retracement in EUR/USD appears to be losing traction for the time being, note Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: Yesterday, we held the view that EUR “is likely to edge higher.” We were also of the view that “any advance is unlikely to break the strong resistance at 1.0730.” In line with our expectations, EUR did not break 1.0730, as it retreated after reaching a high of 1.0717 and closed at 1.0677 (-0.12%). The current price action is likely part of a consolidation. Today, EUR is likely to trade in a range, probably between 1.0650 and 1.0715. 

Next 1-3 weeks: Our update from yesterday (19 Sep, spot at 1.0690) still stands. As highlighted, downward momentum is beginning to wane. In order to keep the momentum going, EUR must break and stay below 1.0630 in the next couple of days, or the odds of further decline will diminish rapidly. Conversely, if EUR breaks above 1.0730 (no change in the ‘strong resistance’ in level from yesterday), it would also mean that EUR is not weakening further.