Positive phase in EUR/USD ended, now looks to 1.10 – UOB

EUR/USD could now resume the downside and refocus its attention to the 1.10 area, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for EUR to “dip to 1.1050” did not materialize as it traded in a quiet manner within a sideway range of 1.1062/1.1093. Momentum indicators are mostly neutral now and EUR is likely to continue to trade sideways. Expected range for today, 1.1050/1.1090”.

Next 1-3 weeks: “While we cautioned yesterday (05 Nov, spot at 1.1125) that the “odds for further EUR strength have diminished”, the sharp drop in EUR that easily cracked the 1.1090 ‘strong support’ level and the subsequent weak daily closing at 1.1074 came as a surprise (the -0.47% decline is the largest 1-day drop in 6 weeks). The positive phase in EUR that started about one month ago has ended and the current weakness is viewed as a corrective pullback (and not a major reversal). For the next couple of weeks, EUR is likely to trade with a downside bias towards 1.1000. At this stage, a sustained decline below this level is not expected. Resistance is at 1.1125 but only a 1.1140 (‘strong resistance’ level) would indicate our view for a pull-back is incorrect”.