EUR/USD potential drop to 1.1105 – UOB

In view of FX Strategists at UOB Group, there is still scope for a test of the vicinity of the 1.1100 handle in the next weeks.

Key Quotes

“The support indicated at 1.1180 was ‘weaker’ than expected as EUR sliced through this level and dropped to a low of 1.1130. While the decline appears to be running ahead of itself, there is scope for a move lower towards 1.1105/10, the low seen in late May. Resistance is at 1.1170 followed by 1.1210 which is likely strong enough to cap any further rebound”.

“The sharp and sudden decline that easily took out the strong 1.1150 support was unexpected (low of 1.1130). While downward momentum has improved considerably, we are not ready to adopt a bearish stance just yet. That said, the immediate pressure is clearly on the downside and this is expected to lead to a move towards 1.1105/10, the low in late May. A clear break below 1.1105/10 would mean that we have to contend with a much lower EUR in the coming days (next support is much lower at 1.0915). Overall, this pair is expected to stay under pressure unless it can move and stay above 1.1210”.