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UOB economists Quek Ser Leang Lee and Sue Ann highlight that EUR/USD spiked to 1.1848 before reversing sharply, leaving the Euro looking overextended on the downside. They see scope for further weakness but expects firm support at 1.1715, with 1.1665 unlikely to be tested. Over the next one to three weeks, EUR/USD is projected to trade between 1.1665 and 1.1840.
Euro-Dollar downside seen limited
“Last Friday, we expected EUR to “consolidate between 1.1760 and 1.1805.” We were incorrect, as EUR soared to 1.1848 and then reversed sharply, plummeting to a low of 1.1760. EUR closed at 1.1762 (-0.16%) but opened with a gap lower today.”
“While there is scope for EUR to weaken further, the sharp drop appears to be overextended, and any decline is expected to face firm support at 1.1715. We do not expect the major support at 1.1665 to come into view. Resistance levels are at 1.1775 and 1.1800.”
“Although our ‘strong support’ level at 1.1735 has not been breached yet, the price movements suggest that 1.1850 is out of reach and EUR is likely to trade in a range for the time being, probably between 1.1665 and 1.1840.”
