EUR/USD could extend the trend lower to the sub-1.1800 region in the next weeks, according to UOB Group FX Strategists.
Observation for 24 hours: “We predicted that EUR will ‘move sideways within a 1.1835/1.1885 band’ yesterday. We were caught off guard by the sudden spike in volatility, as the EUR momentarily soared to 1.1894 before plummeting to 1.1805. While the quick decline looks to be outpacing itself, the strong downward momentum suggests that a breach of the main support around 1.1800 is not out of the question. The next support level, at 1.1780, is likely out of reach for the time being. A break over 1.1865 (minor resistance at 1.1850) on the upside would signal that the recent weakness has stabilized.”
Within the next 1-3 weeks: “Last Thursday (01 July, spot at 1.1855), we turned bearish on EUR, stating that it’is projected to trade with a downward tilt towards 1.1800.’ We noted on Monday (05 Jul, spot at 1.1860) that ‘the probability for EUR to go below 1.1800 has lessened’ after EUR bounced from 1.1805. ‘To revive the current sagging momentum, EUR must move and stay below 1.1835 within the next 1 to 2 days,’ we added. However, the steep overnight dip to 1.1805 caught us off guard. The EUR has regained its downward momentum, and a breach of 1.1800 would allow it to fall to 1.1780. As long as EUR does not move over 1.1895 (the previous’strong resistance’ level was at 1.1915), the current weakness is considered intact.”/n
