EUR/USD risks a deeper pullback below 1.1770 – UOB

In opinion of FX Strategists at UOB Group, EUR/USD faces further losses if it clears 1.1770 in the near term.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is room for EUR to weaken to 1.1820’.  We added, ‘the major support at 1.1795 is not expected to come into the picture’. The subsequent weakness exceeded our expectations as EUR dropped to within a few pips of 1.1795 (low of 1.1800). While downward momentum has not improved by all that much, the downside risk is still intact. From here, EUR could dip below 1.1795 but it is unlikely able to maintain a foothold below this level. The next support at 1.1770 is unlikely to come under threat. Resistance is at 1.1835 followed by 1.1860.”

Next 1-3 weeks: “Yesterday (08 Sep, spot at 1.1840), we highlighted that the recent EUR strength has run its course and we expected EUR to ‘consolidate and trade between 1.1795 and 1.1895’. There is no change in our view even though we did not quite anticipate the rapid manner by which EUR approaches the bottom of the expected range at 1.1795 (overnight low of 1.1800). Downward momentum is showing tentative signs of picking up but only a daily closing below 1.1770 would indicate the start of a deeper pullback in EUR. The prospect for EUR to close below 1.1770 is not high for now but would increase unless EUR moves above 1.1860 within these couple of days.”