EUR/USD: A drop to 1.0515 appears in the pipeline

UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia see EUR/USD slipping back to the 1.0515 region in the near term.

Key Quotes

24-hour view: After EUR dropped sharply to a low of 1.0572 on Monday, we highlighted yesterday that “there is room for EUR to weaken further to 1.0555 before stabilisation is likely.” EUR did not quite reach 1.0555 as it dropped to a low of 1.0560 before ending the day at 1.0570 (0.19%). While there is no sign of stabilisation yet, there is also no significant increase in downward momentum. Today, EUR could decline further to 1.0545 before levelling off. The major support at 1.0515 is unlikely to come into view. On the upside, if EUR breaks above 1.0605 (minor resistance is at 1.0590), it would mean that EUR is not weakening further.

Next 1-3 weeks: Our update from yesterday (26 Sep, spot at 1.0590) still stands. As highlighted, the recent price action suggests that EUR is likely to weaken to 1.0515 in the coming days. EUR’s downside risk remains if it stays below 1.0650 (‘strong resistance’ level was at 1.0665 yesterday).