EUR/USD now looks to next support at 1.0870 – UOB

FX Strategists at UOB Group suggested EUR/USD could now target the 1.0870 level in the near term.

Key Quotes

24-hour view: “We highlighted yesterday the “rapid drop in EUR could test the year-to-date low near 1.0925 first before stabilizing”. While EUR subsequently dipped to 1.0907, there is no sign of stabilization just yet. The immediate risk is still on the downside and a break of the major 1.0900 level could lead to a rapid drop in EUR (next support is at 1.0870). Resistance is at 1.0940 but only a move back above 1.0960 would indicate that the current weakness has stabilized”.

Next 1-3 weeks: “We highlighted yesterday (26 Sep, spot at 1.0950) “downward momentum has picked up considerably” and that the “risk of a break of the year-to-date low near 1.0925 has increased”. EUR cracked 1.0925 without much difficulty as it dropped to 1.0907 before ending the day on a soft note at 1.0921 (-0.18%). Downward momentum has increased further and EUR is likely ready to challenge the next support at 1.0870. Looking forward, if EUR were to break the relatively strong 1.0870 level, it could continue to move lower to 1.0820. All in, EUR is expected to stay under pressure unless it can move above 1.0990 (‘strong resistance’ was at 1.1010 yesterday). On a shorter-term note, 1.0960 is already quite a strong level”.