EUR/USD risks a drop below 1.0100 – UOB

According to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, EUR/USD could slip bck below the 1.0100 level in the next weeks.

Key Quotes

24-hour view: “Our view for EUR to range-trade yesterday was incorrect as it dropped sharply to 1.0153 before closing on a weak note at 1.0160 (0.96%). Strong downward momentum suggests EUR could weaken further but a sustained decline below the early Aug low near 1.0120 is unlikely. On the upside, a breach of 1.0205 (minor resistance is at 1.0185) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “Yesterday (15 Aug, spot at 1.0260), we highlighted that ‘conditions remain overbought and this coupled with waning momentum suggests the odds for EUR to advance to 1.0400 have diminished’. However, we did not expect the sharp sell-off as EUR cracked our ‘strong support’ level at 1.0230 and plummeted to 1.0153 before closing on a weak note at 1.0160 (-0.96%). The rapid improvement in downward momentum suggests EUR could weaken further to 1.0120, as low as 1.0095. Overall, only a breach of 1.0250 (‘strong resistance’ level) would indicate that the current weakness is unlikely to extend lower.”