Heading to 1.1040 – UOB Group

The euro (EUR) is expected to trade in a range between 1.1040 and 1.1200, note UOB Group analysts Quek Ser Leang and Lee Sue Ann.

Limited in the range of 1.1040/1.1200

24-HOUR OUTLOOK: “Our expectation of the EUR breaking above 1.1200 yesterday was incorrect as it fell sharply to close down 0.57% (1.1120), its biggest one-day decline since 2-1 /2 months. The downside appears to be overextended but there is room for the EUR to drop further to 1.1095 before stabilization is likely as major support at 1.1040 is threatened, followed by 1.1165.

WEEKS 1-3: “After the EUR rallied last Friday, we indicated on Monday (26 August at 1.1185) that ‘increasing momentum has increased the likelihood of the EUR reaching 1.1275.’ I indicated that “we will be of the same opinion, provided that the ‘strong support’ at 1.1105 is not breached”. Yesterday, the EUR fell sharply to a low of 1.1104. While our “strong support” level was only slightly breached, the upward momentum has largely dissipated. For now, we expect the EUR to trade in a range between 1.1040 and 1.1200. Looking ahead, as long as it does not break clearly below 1.1040, there is still a chance for the EUR to rise above 1.1200 later.”