Further weakness could drag EUR/USD to the 0.9870 region and 0.9830, suggested FX Strategists at UOB Group Quek Ser Leang and Peter Chia.
24-hour view: “While we expected EUR to ‘continue to weaken’ yesterday, we were of the view that ‘a sustained decline below 1.0000 is unlikely’. We did not anticipate the sharp sell-off as EUR plummeted to a low of 0.9924 before closing sharply lower by 0.93% (NY close of 0.9941). Despite being deeply oversold, the weakness in EUR has yet to stabilize and further decline appears likely. The next support is at 0.9880 (minor support is at 0.9900). On the upside, a breach of 0.9990 (minor resistance is at 0.9960) would indicate that the current weakness in EUR has stabilized.”
Next 1-3 weeks: “We indicated yesterday (22 Aug, spot at 1.0035) that a break of 1.0000 would not be surprising but it is left to be seen if the oversold decline in EUR could break the year-to-date low at 0.9950. The anticipated decline exceeded our expectations as EUR easily took out 0.9950 (low of 0.9924). While conditions remain oversold, solid downward momentum is likely to lead to further EUR weakness. The next levels to focus on are at 0.9870 and 0.9830. On the upside, a breach of 1.0035 (‘strong resistance’ level was at a much higher level of 1.0115 yesterday) would indicate that EUR is unlikely to weaken further.”