EUR/USD: Below 1.0490 the downtrend in EUR is likely to resume – UOB Group

The Euro (EUR) is likely to trade in a range between 1.0505 and 1.0575. In the longer run, recent downtrend in EUR is likely to resume if it breaks and stays below 1.0490, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

EUR is likely to trade in a range between 1.0505 and 1.0575

24-HOUR VIEW: “EUR dropped sharply but briefly, to 1.0523 on Tuesday. Yesterday (Wednesday), we noted that ‘The brief decline did not result in any increase in momentum.’ We expected EUR to ‘trade in a range, likely between 1.0550 and 1.0620.’ Our view turned out to be incorrect, as EUR plummeted to 1.0507, rebounding to close at 1.0543 (-0.49%). The sharp drop appears to be overdone, and EUR is unlikely to weaken much further. Today, it is more likely to trade in a range between 1.0505 and 1.0575.”

1-3 WEEKS VIEW: “After holding a negative EUR view for two weeks, we revised the outlook to neutral yesterday (20 Nov, spot at 1.0590), indicating that ‘the weakness in EUR has stabilised.’ We held the view that EUR ‘is expected to consolidate between 1.0520 and 1.0685.’ Although EUR subsequently dropped below the bottom of our expected range (low of 1.0507), there has been no significant increase in momentum. The recent downtrend in EUR is likely to resume if it breaks and stays below 1.0490. The likelihood of EUR breaking clearly below 1.0490 will remain intact as long as 1.0600 is not breached.”