EUR/USD now eyes a drop to 1.0635 – UOB

FX Strategists at UOB Group noted EUR/USD could grind lower and test the 2020 low at 1.0635 in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘as long as EUR does not move above 1.0860 (minor resistance is at 1.0840), further decline towards 1.0775 would not be surprising’. We added, ‘for today, the major support at 1.0750 could be just out reach’. EUR subsequently weakened to 1.0754, snapped back up to 1.0846 before dropping back again. Despite the choppy price action, the underlying tone has weakened further and from here, EUR could move below 1.0750 but it is left to be seen if it can maintain a toehold below this strong support level (next support is at 1.0720). Resistance is at 1.0810 followed by 1.0835.”

Next 1-3 weeks: “We have held the same view since last Thursday (16 Apr, spot at 1.0890) wherein ‘the outlook is mixed’ and EUR could ‘continue to trade in an undecided manner within a broad 1.0750/1.1000 range for a period’. After several days of ‘trading sideways, EUR is approaching the bottom of the range as it dropped to 1.0754 yesterday (23 Apr). Downward momentum has improved, albeit not by much. While the near-term bias is tilted to the downside, we prefer to wait for an added confirmation of a NY closing below 1.0720 before anticipating EUR weakness towards the March’s low of 1.0635. For now, the probability for such a scenario is not high but it would increase quickly unless EUR can move and stay above 1.0855 within these few days.”