EUR/USD faces some near-term consolidation – UOB

According to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, EUR/USD could attempt some consolidation ahead of a probable move to 1.0350.

Key Quotes

24-hour view: “Yesterday, we highlighted that the ‘rapid decline in EUR could extend to 1.0400’. We added, ‘a sustained decline below this level appears unlikely’. While our view was not wrong as EUR subsequently dropped to 1.0381, we did not expect the sharp bounce from the low (NY high of 1.0488). The strong rebound could test 1.0505 first before easing (strong resistance at 1.0535 is not expected to come under threat). On the downside, a breach of 1.0430 (minor support is at 1.0450) would indicate that EUR is unlikely to rebound further.”

Next 1-3 weeks: “We highlighted yesterday (30 Jun, spot at 1.0445) that risk for EUR has shifted to the downside. We indicated that a break of 1.0400 would not be surprising but strong support can be expected at 1.0350. EUR subsequently cracked 1.0400, dropped to 1.0381 before rebounding strongly. Shorter-term downward momentum has eased somewhat and EUR could consolidate for a couple of days first before attempting to move towards 1.0350 (note that 1.0380 is acting as a solid support now). On the upside, a break of 1.0535 (no change in ‘strong resistance’ level from yesterday) would indicate that 1.0350 is not coming into the picture.”