EUR/USD still faces rising downside risks – UOB

FX Strategists at UOB Group noted the shared currency remains under pressure and that EUR/USD could still slip back to the 1.1100 neighbourhood.

Key Quotes

24-hour view: “EUR traded between 1.1111 and 1.1150 yesterday, narrower than our expected sideway-trading range of 1.1105/1.1155. The underlying tone has improved somewhat and this could lead to a probe of 1.1170. For today, a move above 1.1200 is not expected. Support is at 1.1125 followed by the still very solid level at 1.1100”.

Next 1-3 weeks: “After EUR traded within a wide range of 1.1100/1.1187 last Thursday (25 Jul), we indicated on Friday (26 Jul, spot at 1.1145) that it is “too early to tell whether EUR could move and stay below 1.1100”. We added, “EUR could consolidate and trade sideways for a few days”. From that perspective, the relatively quiet price action over the past couple of days was not surprising (EUR traded between 1.1110 and 1.1150 for the past two days). At this stage, it is still not clear whether EUR could move and stay below 1.1100. That said, the downside risk is clearly higher and only a break of the 1.1200 ‘key resistance’ (no change in level) would indicate that the recent weakness in EUR has stabilized”.