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United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that EUR/USD remains under pressure after briefly dipping to 1.1416 before rebounding. They see scope for short-term consolidation between 1.1435 and 1.1495 as oversold conditions unwind, but maintain a bearish bias toward 1.1410, and warn that a break of the 1.1390/1.1410 support zone could open the way to 1.1210.
Oversold Euro pauses within range
“24-HOUR VIEW: When EUR was at 1.1460 in the early Asian session last Friday, we indicated that “conditions are deeply oversold, but there is scope for EUR to drop below the support at 1.1445.” However, we held the view that “the major support at 1.1410 is unlikely to come under threat.” EUR subsequently dropped to a low of 1.1416, rebounding to close at 1.1468 (+0.10%). Downward momentum is slowing, and conditions are unwinding from oversold levels. In other words, instead of continuing to decline, EUR is more likely to consolidate today, probably between 1.1435 and 1.1495”
“1-3 WEEKS VIEW: Last Thursday (18 Jun, spot at 1.1505), we highlighted that while EUR “is expected to remain under pressure, but it may need some time to consolidate before making a move to 1.1445.” After EUR dropped to 1.1450, we highlighted on Friday (19 Jun, spot at 1.1460) that “a breach of 1.1445 will not be surprising, and the next technical target is 1.1410.” EUR subsequently declined to a low of 1.1416 before rebounding. While there is still scope for EUR to decline to 1.1410, oversold short-term conditions could lead to 1-2 days of consolidation first. Overall, only a breach of 1.1530 (‘strong resistance’ level was at 1.1540 last Friday) would indicate that 1.1410 is out of reach.”
