Set to test support 1.1030 – UOB Group

Euro (EUR) could continue to weaken; any downside is likely limited to a test of 1.1030. In the longer term, the rapid build-up of downward momentum is likely to lead to euro weakness; levels to monitor are 1.1030 and 1.1000, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

The levels to monitor are 1.1030 and 1.1000

24 HOUR OUTLOOK: “We detected a ‘slight increase in downward momentum’ yesterday. We expected the EUR to decline, but felt that “any downside is likely to be limited to a test of 1.1105”. In a surprising move, the EUR fell sharply, easily falling below 1.1105. It also breached major support at 1.1060, hitting a low of 1.1044. While oversold, the decline did not stabilize. EUR could continue to weaken today, but this time any downside is likely to be limited to a test of 1.1030. Major support at 1.1000 is unlikely to be threatened. Resistance levels are at 1.1085 and 1.1110.”

WEEKS 1-3: “Our most recent narrative was last Thursday (26 September, spot at 1.1130) where the EUR “probably entered a range trading phase, probably between 1.1060 and 1, 1215″. The EUR rose above 1.1200 last Friday and again on Monday, but on both occasions pulled back quickly. Yesterday, we indicated that “while price action supports our view that the EUR is trading in a range, having pulled back from the upper bound of the expected 1.1060/1.1215 range, it may now instead test the inferior”. However, instead of testing 1.1060, the EUR broke below this level and hit a low of 1.1044. EUR closed at a 3-week low of 1.1067, down 0.60%. Downward momentum is building rapidly, and this could lead to further weakness in the euro. The levels to monitor are 1.1030 and 1.1000. To keep the momentum building, the EUR must not rise above 1.1150, the current “strong resistance” level.