EUR/USD risks a move to the 1.1770 region – UOB

UOB Group’s FX Strategists noted EUR/USD now moved into a negative phase and could test 1.1770 and below in the next weeks.

Key Quotes

24-hour view: “The swift and sharp decline in EUR to an overnight low of 1.1840 came as a surprise. While the rapid drop is oversold, robust downward momentum suggests EUR could decline further towards 1.1800. For today, EUR is unlikely to threaten the next support at 1.1770. Resistance is a 1.1880 followed by 1.1910.”

Next 1-3 weeks: “We have expected EUR to trade sideways for more than a week. In our latest narrative from Tuesday (22 Mar, spot at 1.1890), we highlighted that ‘looking ahead, the risk for a breach of the bottom of the expected 1.1840/1.2000 range first appears to be higher’. We added, ‘EUR has to close below 1.1840 before a sustained decline can be expected’. EUR dropped to 1.1840 during late NY session yesterday before edging below the strong support after NY close. Rapid improvement in downward momentum indicates that the sideway-trading phase has come to an end. The current movement is viewed as the early stages of a weak phase in EUR that could extend lower to 1.1770, possibly 1.1740. On the upside, a break of 1.1940 would indicate that our view for a lower EUR is wrong.”