In the opinion of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, the idea of further weakness in EUR/USD seems to be losing the grip for the time being.
24-hour view: Yesterday, we held the view that EUR “is likely to consolidate and trade between 1.0980 and 1.1055.” Our view for EUR to consolidate was not wrong, even though it traded in a narrower range than expected (1.0992/1.1045). Further consolidation appears likely. However, the slightly weaker underlying tone suggests EUR is likely to trade in a lower range of 1.0970/1.1030.
Next 1-3 weeks: We have held a negative EUR view since the middle of last week (see annotations in the chart below). After EUR dropped to 1.0942 and rebounded, we highlighted yesterday (31 Jul, spot at 1.1025) that “downward momentum has eased somewhat, but only a breach of 1.1070 would indicate that EUR is not weakening further.” We continue to hold the same view. Looking ahead, it is worth noting that if EUR breaks below 1.0942, there is a rather strong support near 1.0920.