Euro (EUR) could drop below the 1.1595 support level, potentially testing 1.1575. In the longer run, downward momentum has increased further, but not significantly; for a continued decline, EUR must first close below 1.1595, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Downward momentum has increased further
24-HOUR VIEW: “Following EUR’s price movements two days ago, we noted yesterday that ‘momentum indicators are turning flat.’ We expected EUR to ‘trade in a range between 1.1630 and 1.1680.’ Our assessments were incorrect, as EUR dipped to 1.1623, rebounded to 1.1662, and then dropped sharply to a low of 1.1598. EUR closed on a soft note at 1.1605 (-0.39%). Today, EUR could drop below the 1.1595 support level, potentially testing 1.1575. Resistance is at 1.1630, followed by 1.1650.”
1-3 WEEKS VIEW: “Our most recent narrative was from two days ago (20 Aug, spot at 1.1645), in which we highlighted that ‘there has been a tentative increase in downward momentum.’ We also highlighted that ‘as long as EUR holds below the ‘strong resistance’ level, currently at 1.1705, it could edge lower and test the major support at 1.1595.’ We were not wrong, as EUR fell to a low of 1.1598 yesterday. Downward momentum has increased further, but not significantly. For a continued decline, EUR must first close below 1.1595. The likelihood of EUR closing below 1.1595 will remain intact as long as 1.1675 (‘strong resistance’ level previously at 1.1705) is not breached. Looking ahead, the next levels to watch below 1.1595 are 1.1575 and 1.1540.”
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