EUR/USD risks a deeper pullback below 1.1680 – UOB

According to FX Strategists at UOB Group, EUR/USD could slip back to the 1.1630 level on a breach of 1.1680 in the near term.

Key Quotes

24-hour view: “Our expectations for EUR to ‘trade between 1.1700 and 1.1745’ yesterday was incorrect as it dropped to 1.1683 before rebounding to close at 1.1694 (-0.17%). Downward momentum has improved, albeit not by much. From here, there is room for EUR to dip below 1.1680 but it may not be able to maintain a foothold below this level (next support is at 1.1662). On the upside, a break of 1.1725 (minor resistance is at 1.1710) would indicate that the current mild downward pressure has eased.”

Next 1-3 weeks: “Last Friday (24 Sep, spot at 1.1745), we highlighted that the recent weak phase in EUR has ended and we expected EUR to trade between 1.1700 and 1.1800. EUR took out 1.1700 yesterday (27 Sep) and dropped to 1.1683. Downward momentum is showing tentative signs of building and a daily closing below 1.1680 would indicate that EUR could break August’s low at 1.1662 and head towards 1.1630. The prospect for EUR to close below 1.1680 is quite high and would increase further as long as EUR does not move above 1.1745 (‘strong resistance’ level) within these few days.”