Likely to trade in a range between 1.0910 and 1.0960 – UOB Group

Rather than weakening further, the euro (EUR) is more likely to trade in a range between 1.0910 and 1.0960. In the long term, the outlook for the EUR remains negative; the slowing pace suggests that the probability of breaking the 1.0860/1.0885 support zone is not high, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

Low probability of breaking the 1.0860/1.0885 support zone

24-HOUR OUTLOOK: “After the EUR dropped to 1.0936 for two days, we indicated yesterday that ‘there has been a slight increase in momentum and the EUR is likely to continue to decline.’ I added: “Whether it has enough momentum to break the major support at 1.0900 remains to be seen.” In NY trade, the EUR briefly fell to 1.0898, recovering to close largely unchanged at 1.0935 (-0.04%). The return of oversold conditions and the slowing pace suggest that rather than further weakening, the EUR is more likely to trade in a range, perhaps between 1.0910 and 1.0960.”

WEEKS 1-3: “I turned negative on the EUR last Wednesday (October 02) when the EUR was trading at 1.1065 (see chart annotations below). As we watched the decline, in our update yesterday (October 10, spot at 1.0940), we indicated that “the outlook for the EUR remains negative and the next level to watch is 1.0900″. In NY trade, the EUR fell to 1.0898, rebounding to close largely unchanged. While the outlook remains negative, the downward momentum appears to be slowing and the likelihood of the EUR breaking the significant support area between 1.0860 and 1.0885 is not high for now. However, only a break of 1.0995 (the ‘strong resistance’ level was at 1.1010 yesterday) would mean that the EUR weakness has stabilised.”