EUR/USD: Downward momentum gathers traction – UOB

24-hour view: EUR dipped to 1.0827 last Friday before rebounding to close little changed at 1.0881 (-0.05%). Yesterday (Monday), we indicated that “while downward pressure appears to have eased, EUR could dip to 1.0810 before a more sustained recovery is likely.” In NY trade, EUR dropped to 1.0802 before rebounding. This time around, downward pressure has eased, and EUR is unlikely to weaken much further. Today, EUR is more likely to trade in a range, probably between 1.0800 and 1.0870. 

Next 1-3 weeks: Last Friday (01 Dec, spot at 1.0895), we noted that “upward momentum has faded, and downward momentum has increased a tad.” We expected EUR to “edge lower towards 1.0810.” In line with our expectations, EUR dropped to a low of 1.0802 yesterday (04 Dec). While downward momentum has increased further, it is not enough to suggest that EUR is ready to decline in a sustained manner. EUR has to break and stay below 1.0770 before a sustained decline is likely. The chance of EUR breaking clearly below 1.0770 is not high for now, but it will remain intact unless EUR breaks above the ‘strong resistance’ at 1.0900 (level was at 1.0965 yesterday).