Sharp decline in Euro (EUR) vs US Dollar (USD) has room to test 1.0895 before stabilisation is likely; any further decline is unlikely to reach 1.0850. In the longer run, decrease in momentum indicates the chance for EUR to rise has diminished; a breach of 1.0850 would suggest EUR has entered a range-trading phase, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Chance for EUR to rise has diminished
24-HOUR VIEW: “While we expected EUR to ‘trade with an upside bias’ yesterday, we were of the view that ‘any advance might not reach 1.1050.’ The subsequent price action did not turn out as we expected. EUR soared to 1.1094 and then plunged to 1.0912 before ending the day largely unchanged at 1.0951 (-0.05%). The sharp decline has room to test 1.0895 before stabilisation is likely. Any further decline is unlikely to reach the strong support at 1.0850. Resistance is at 1.0990, followed by 1.1040.”
1-3 WEEKS VIEW: “After EUR pulled back to 1.0881 on Monday, we indicated on Tuesday (08 Apr, spot at 1.0925) that the pullback ‘has resulted in a decrease in upward momentum, and the chance for EUR to rise has diminished.’ We added, ‘a breach of 1.0850 (‘strong support’ level) would indicate that instead of advancing further, EUR has entered a range-trading phase.’ Yesterday (Wednesday), EUR rose to 1.1094 and then fell sharply. There has been no further increase in either upward or downward momentum, and we continue to hold the view that as long as 1.0850 is not breached, there is still a slim chance for EUR to rise.”
