EUR/USD now risks a deeper pullback – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang noted EUR/USD faces a solid support around 1.0350 for the time being.

Key Quotes

24-hour view: “We highlighted yesterday that ‘downward momentum has improved and the risk is on the downside’. We added, ‘any weakness is likely to face solid support at 1.0485’. The anticipated weakness exceeded our expectations as EUR easily cracked 1.0485 and plummeted to 1.0433. While oversold, the rapid decline could extend to 1.0400. For today, a sustained decline below this level is unlikely. Resistance is at 1.0475 followed by 1.0505.”

Next 1-3 weeks: “We have expected EUR to consolidate for close to 2 weeks. Our view was not wrong as EUR consolidated until yesterday (29 Jun) when it plummeted below the bottom of our expected 1.0460/1.0630 range (low of 1.0433). The price actions suggest that the consolidation phase has ended. The risk has shifted to the downside and a break of 1.0400 would not be surprising. That said, 1.0350 is expected to offer solid support. Overall, only a break of the ‘strong resistance’, currently at 1.0535 would indicate that the downside risk has dissipated.”