EUR/USD: shrinking odds for a breach of 1.1297 – UOB

According to FX Strategists at UOB Group, a break below 1.1295 appears to be losing traction.

Key Quotes

24-hour view: “We expected EUR to break below last week’s 1.1332 low yesterday but were of the view “odds for a break of the year-to-date low of 1.1297 are not high”. EUR subsequently dipped to a low of 1.1299 before staging a mild recovery. While downward momentum is beginning to wane, the current weakness in EUR is not showing sign of stabilizing just yet. Only a break above 1.1375 (minor resistance at 1.1350) would indicate that a short-term bottom is in place. Otherwise, EUR could continue to grind lower to 1.1280. The next support at 1.1250 is not expected to come into the picture, at least not for today”.

Next 1-3 weeks: “We have maintained the same view since last Friday (26 Oct, spot at 1.1375) wherein “EUR is still weak; but the prospect for sustained break below the year-to-date low of 1.1297 is not that high”. EUR came within 2 pips of 1.1297 yesterday but rebounded from a low of 1.1299 during NY hours. While we continue to hold the same view, we indicated yesterday (31 Oct, spot 1.1345), the odds for a break of 1.1297 has improved and would continue to improve unless EUR can break above the ‘key resistance’. The ‘key resistance’ is currently at 1.1400, slightly lower from 1.1415 yesterday. To put it another way, a NY closing below the year-to-date low would suggest EUR could continue to head south in the coming days while a break of the ‘key resistance’ would indicate that the recent weakness has stabilized and EUR has moved into a consolidation phase (and likely to trade sideways in the coming days)”.