EUR/USD: Risks remain on the downside – UOB

FX Strategists at UOB Group noted further downside still remains on the cards in EUR/USD.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘while oversold, the weakness in EUR could break the very solid support at 1.1700’. Our view was not wrong as EUR dropped briefly to 1.1692, popped to 1.1742 before dropping back down again. While EUR could weaken further, the still oversold conditions suggest that EUR is unlikely able to break the major support at 1.1670 for now (next support is at 1.1640). Resistance is at 1.1720 followed by 1.1740.”

Next 1-3 weeks: “Our view from yesterday (18 Aug, spot at 1.1710) still stands. As highlighted, risk for EUR has shifted to the downside and a break of the solid support at 1.1700 would open up the way for EUR to move lower to 1.1670. EUR subsequently breached 1.1700 as it dropped to 1.1692 during NY session. Now that 1.1700 is breached, the next level to focus on is at 1.1670 (followed by 1.1640). That said, oversold shorter-term conditions could slow the pace of any further decline. Overall, the downside risk is deemed intact as long as EUR stays below 1.1775 (no change in ‘strong resistance’ level).”