FX Strategists at UOB Group Quek Ser Leang and Peter Chia suggest EUR/USD could still visit the 0.9500 region in the next weeks.
24-hour view: “We highlighted yesterday that ‘the bias for EUR is tilted to the downside but a clear break below 0.9530 is unlikely’. While our view was not wrong as EUR subsequently dipped to a low of 0.9534, we did not expect the lift-off from the low that sent EUR surging to a high of 0.9750. The sharp and rapid rise appears to be overdone and EUR is unlikely to advance much further. For today, we expect EUR to trade sideways between 0.9620 and 0.9750.”
Next 1-3 weeks: “We have held a negative EUR for more than 2 weeks now. In our latest narrative from Monday (26 Sep, spot at 0.9630), we held the view that EUR ‘could continue to weaken, possibly to 0.9500’. Yesterday (28 Sep), EUR dropped to 0.9534 before jumping to test our ‘strong resistance’ level at 0.9750. As the ‘strong resistance’ is not clearly breached, there is still a chance (albeit a slim one) for EUR to drop to 0.9500. Looking ahead, a breach of 0.9750 would indicate that EUR could trade sideways within a broad range for a period of time.”