Markets Strategist at UOB Group Quek Ser Leang and Senior FX Strategist Peter Chia note further downside in EUR/USD is expected to meet a solid support around 1.0470.
24-hour view: “Yesterday, we expected EUR to edge higher but we were of the view that ‘the major resistance at 1.0800 is not expected to come under threat’. EUR then rose to 1.0759 before lurching lower and nosediving by 1.46% (NY close of 1.0575), its largest 1-day drop since Sep last year. While EUR could weaken further, a clear break of 1.0500 is unlikely. Resistance is at 1.0610; a breach of 1.0640 would indicate that EUR is unlikely to test 1.0500.”
Next 1-3 weeks: “Our latest narrative was from Monday (13 Mar, spot at 1.0685) where we were of the view that EUR ‘is likely to consolidate between 1.0560 and 1.0800’. EUR rose to 1.0759 in London trade yesterday before plunging below 1.0560 (low has been 1.0514). While the rapid drop appears to be ‘too fast, too soon’, the risk of EUR dropping further has increased. However, 1.0470 is a major support, and it remains to be seen if EUR can break this level. Overall, only a breach of the ‘strong resistance’ at 1.0680 in the next days would indicate that the downside risk has faded.”