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United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann note EUR/USD has slipped to a two-week low near 1.1680 as Euro area activity weakens, but short-term downside momentum is slowing. They expect range trading between 1.1665 and 1.1715 intraday. A sustained break below 1.1665 is needed to open the way to 1.1625, while resistance is seen at 1.1715 and 1.1750.
Key support at 1.1665 under scrutiny
“24-HOUR VIEW: We expected EUR to “retest the 1.1720 level” two days ago. After EUR broke below 1.1720 and dropped to a low of 1.1702, we indicated yesterday that “while the risk for today remains on the downside, the increase in downward momentum is not enough to indicate a move to 1.1665.” We noted that “there is another support level at 1.1685.” EUR subsequently tested the 1.1685 level, rebounding to 1.1716 before dropping to a low of 1.1668 during the NY session. EUR closed slightly lower by 0.17% at 1.1683. While there is no sign of a recovery yet, downward momentum is starting to slow, and instead of continuing to decline today, EUR is more likely to trade in a range between 1.1665 and 1.1715.”
“1-3 WEEKS VIEW: We highlighted on Monday (20 Apr, spot at 1.1750) that EUR “is likely to trade in a range for the time being, probably between 1.1665 and 1.1840.” Yesterday (23 Apr, spot at 1.1705), we indicated the following: “There has been an increase in short-term downward momentum, but it is not sufficient to indicate a continued decline. We continue to expect EUR to trade in a range, but a narrower 1.1665/1.1795 range is likely enough contain the price movements for now.” EUR then dropped near the lower boundary of our expected range with a low of 1.1668. Downward momentum has increased further, but EUR must break and hold below 1.1665 before a move to 1.1625 can be expected. The likelihood of EUR breaking clearly below 1.1665 will remain in place as long as the ‘strong resistance’ level, now at 1.1750, is not breached.”
