FX Strategists at UOB Group suggested EUR/USD could slip back below 1.1770 as long as 1.1850 caps the upside.
24-hour view: “Yesterday, we held the view that EUR ‘could dip below 1.1795 but the next major support at 1.1770 is unlikely to come into the picture’. The subsequent weakness exceeded our expectations as EUR dropped to 1.1768 before staging a sharp and rapid rebound. Downward pressure has dissipated with the rebound and EUR is unlikely to challenge the 1.1768 low. For today, EUR is likely to consolidate and trade within a 1.1790/1.1830 range.”
Next 1-3 weeks: “Last Thursday (09 Sep, spot at 1.1815), we highlighted that EUR ‘is still consolidating within a 1.1795/1.1895 range’. We added, ‘while downward momentum is showing tentative signs of picking up, only a daily closing below 1.1770 would indicate the start of a deeper pullback in EUR’. EUR dropped a couple of pips below 1.1770 yesterday (low of 1.1768) before rebounding quickly to close little changed for the day (1.1808, -0.05%). Downward momentum has not improved by much but as long as EUR stays below 1.1850, there is scope for EUR to close below 1.1770 within these few days. Looking ahead, the next support below 1.1770 is at 1.1725.”