EUR/USD could still drop below 1.1600 – UOB

FX Strategists at UOB Group believe EUR/USD still risks a move below the 1.1600 mark.

Key Quotes

24-hour view: “Yesterday, we held view that EUR could ‘probe the 1.1600 support but a sustained decline below this level is unlikely’. However, EUR rebounded strongly from a low of 1.1613. The rebound has room to extend higher but any advance is expected to face stiff resistance at 1.1720 (minor resistance is at 1.1700). Support is at 1.1645 but only a break of 1.1620 would indicate the current mild upward pressure has eased.”

Next 1-3 weeks: “The negative phase in EUR that started more than a week ago is still intact. In our latest update from last Friday (25 Sep, spot at 1.1675), we held the view that the ‘outlook for EUR remains weak but the next support at 1.1600 may not come into the picture so soon’. While EUR subsequently dropped to a low of 1.1611, the decline appears to be running ahead of itself. From here, EUR could dip below 1.1600 but 1.1565 is expected to offer formidable support. All in, only a break of 1.1720 (‘strong resistance’ level previously at 1.1760) would indicate that the negative phase has run its course.”