EUR/USD: downside pressure alleviated above 1.1200 – UOB

FX Strategists at UOB Group noted EUR/USD needs to regain 1.1200 and above to mitigate the downside pressure.

Key Quotes

24-hour view: “EUR moved briefly below the previous year-to-date low of 1.1106 (overnight low of 1.1100) before swinging to 1.1187. The largely unchanged NY closing (1.1145, +0.05%) suggests market is ‘comfortable’ trading around current level. For today, EUR is expected to trade sideways and is unlikely to move much out of yesterday’s 1.1100/1.1187 range”.

Next 1-3 weeks: “EUR dropped below 1.1106 and touched a fresh year-to-date low of 1.1100 before rebounding quickly. The price action was not unexpected as we highlighted on Wednesday (24 Jul, spot at 1.1155) that a “fresh year-to-date low would not be surprising”. We also indicated that “what is less clear is whether any weakness below this level is sustainable”. For now, it is too early to tell whether EUR could move and stay below 1.1100 and only a break of the 1.1200 ‘key resistance’ (no change in level from yesterday) would indicate that the current downward pressure has eased. Meanwhile, after yesterday’s hectic price action, EUR could consolidate and trade sideways for a few days. Looking forward, if EUR were to registered a NY closing below 1.1100, it would greatly increase the risk of a break of the next support at 1.1045”.