EUR/USD could slip back below the 1.0940 level in the near term, suggested FX Strategists Quek Ser Leang and Lee Sue Ann at UOB Group.
24-hour view: “Yesterday, we highlighted that ‘there is room for EUR to dip to 1.1015 first before a rebound can be expected’. We added, ‘a break of the major support at 1.0990 still appears unlikely’. The subsequent weakness exceeded our expectations as EUR cracked 1.0990 and plummeted to 1.0959. While oversold, the rapid decline has yet to stabilize. From here, EUR could dip below the next major support at 1.0940 but a sustained decline below this level is unlikely (the next support at 1.0900 is not expected to come under threat). On the upside, a breach of 1.1020 (minor resistance is at 1.1000) would indicate that the current weakness has stabilized.”
Next 1-3 weeks: “Our latest narrative was from last Friday (01 Apr, spot at 1.1085) where EUR has moved into a consolidation phase and is likely to trade between 1.0990 and 1.1170. We did not expect the ease by which EUR cracked 1.0990 yesterday and the subsequent sharp decline to 1.0959. The rapid improvement in momentum suggests further EUR downside. A breach of 1.0940 would not be surprising but at this stage, the odds for a clear break of the next support at 1.0900 are not high. Overall, EUR is expected to trade on its backfoot unless it can move above 1.1060 (‘strong resistance’ level) within these few days.”